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Service on frieght by company

Deepak (----) (91 Points)

06 June 2009

What are the provisiona of service tax liability on company for frieght services received by them from GTA ?

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7 Replies

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 07 June 2009

The company is required to pay the service tax on 25% of the value in the month subsequent to the month of payment. It is eligible for availing the credit on the outward as well as inward freight.

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Satish (CA Final Student) (479 Points)
Replied 08 June 2009

The company is liable to pay service tax under Goods Transport Agency only if the transporter has conferred the liability on either consigner or consignee in his consignment note. If transporter is paying service tax, the company is not liable to pay. Moreover if the company is paying freight either as consigner or consignee, the service tax will be payable by the company according to the liability conferred upon by the transporter. such liability is conferred by ticking against the party either consigner or consignee or transporter. Secondly, the liability to pay service tax is on 100% value and not 25% value of the freight unless the transporter furnishes a declaration that he has not availed any credit of CENVAT on input goods or services or capital goods. If such declaration is furnished, an abatement of 75% of freight is allowable and the service tax is payable only on 25% value. Thirdly, the credit of service tax on freight inward is only allowed as, it is termed clearly as input service. Freight outward is a post manufacture activity and hence credit of service tax on outward freight is not allowed. If the company is not a manufacturer and provide only services, then freight outward is also allowed as credit on input service.

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 09 June 2009

Dear Friends,

The current position of the law asit stands in this reagrd is a little different as under:

1) The GTA is liable to pay the ST where he provides the services to the consignor/ consignee who are NOT sepcified. [ specified - registered partnership, companies, corporations, factories, dealers under central excise etc] In this case he would charge collect and pay the ST.

2) In other cases the GTA CANNOT collect and pay and service reciver should not pay. The specified service reciver is required to pay the ST as a reciver of services.

3) The payment of ST by the reciver could always be on 25% of the freight amount paid. No conditions exist today.

The important factor is to examine whether there is a GT operator/ owner or GT agent with whom one is dealing. In my view ST on GTO is not liable for the tax since only booking agents have been made liable.

Satish (CA Final Student) (479 Points)
Replied 09 June 2009

Mr. Madhukar Hiregange, don't misguide others. Just refer Notification no. 32/2004 of service tax dt. 3rd december 2004. Also the question asked here is relating to Transport of Goods by Road and not GTO. Dont say blindly that there are no conditions exists. Note that Transporter has always a choice to collect & pay service tax. If he wishes so, he need to tick on check box against transporter option in consignment. It is mandatory to issue a consignment note and to select an option whether service tax is payble by consigner, consignee or transporter. Dont give wrong advice without knowing pros & cons of the law.

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 10 June 2009

Dear Satish,

As I understand I have given my best advice. Maybe you are an expert who knows the finer aspects.

This is a forum of sharing and not of blaming/ pointing. If you have a different view you should state it as so and not take matter any further. Alternatively you should approach the moderators fo the site.

Warm Regards

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Satish (CA Final Student) (479 Points)
Replied 10 June 2009

Mr. Madhukar, when somebody ask u the advice, its a legal matter he has to face and he should get correct advice. If u do not know the provisions or u r not updated on the issue, it is not a professional approach to give incomplete solution to the seeker. ultimately, if he goes on the basis of wrong advice, he will be in trouble. So, whenever sombody gives wrong advice, someone who knows better shall take cognizance of and should always interfere and there is no need to approach the moderators of the site. You should better mind on ur interferance in some of my messeges instead of giving me a suggestion of not to take the matter any further.

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 11 June 2009

We at our firm are handling matter on GTA for the past few years and have updated knowledge on what happens and what is happenning. You may visit our firms web site for further info. hiregange.com. I am not saying that I cannot be wrong at all in what I advise but I have been advising central excise for 20 years and in service tax for about 10 and therefore think that what I put up on the web as answers are correct to the best of my knoweldge.

If you are taking this rude view due to me not agreeing to your view in some of the queries, I am sorry for that. My intention is not to make you wrong. Let us agree to disagree without any acrimony.