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service tax is to be paid by consignor or consignee??

rashi doshi (employee) (25 Points)

17 July 2009

the consignor mentions in the bill separately the amt of transportation charge ,which is then reimbursed by the consignee .Then who is responsible to pay service tax on GTA??

would the position be any different had the transportation charges not been mentioned separately in the bill??

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11 Replies

RITESH KOTHARI (B.COM, FCA, DISA(ICAI)) (778 Points)
Replied 17 July 2009

its in the builty wherein it is written that whether ST is to be paid by consignor or consignee.

if transportation is not charged even then u have to pay the transporter which is a third party (assumed), then consignor have to pay ST

Satish (CA Final Student) (479 Points)
Replied 18 July 2009

Persons specified in this regard are liable to pay service tax on GTA if these specified person are required to pay frieght to the transporter as a consigner or consignee. The transporter is liable to pay service tax if the consigner or consignee whosoever is paying frieght is other than the specified person. The reimbursement invoice or debit note can be raised only as a pure agent of the consignor or consignee whosoever is marked as a person responsible to pay service tax in the consignment note. In such cases, the service tax thereon is payable by the person whosoever is liable. Pure Agent cannot pay service tax on behalf of consigner or consignee as the same should be payable under the registration number of consigner or consignee. If the person who is raising a reimbursement debit note / invoice is liable to pay service tax as a consigner or consignee, he has to use the same as input credit of service tax and then he can utilise the same against his liability.

Binod Kumar Sinha (COMMERCIAL DEPARTMENT) (141 Points)
Replied 18 July 2009

The person making payment towards freight would be liable to pay the service tax, in case the consignor or the consignee of the goods transported is one of the following,-

(i) Factory registered under or governed by the Factories Act;

(ii) Company established by or under the Companies Act;

(iii) Corporation established by or under any law;

(iv) Society registered under Societies Registration Act or similar law;

(v) Co-operative society established by or under any law;

(vi) Dealer of excisable goods, registered under the Central Excise Law; or

(vii) Any body corporate established, or a partnership firm registered, by or under any law.

** In cases other than those mentioned in above, the service tax is to be paid by the Goods Transport Agency. The Goods Transport Agencies are required to issue a consignment note other than in cases where the service in relation to transport of goods by road is wholly exempted from service tax. The consignment note should be serially numbered and should contain the names of the consignor and consignee, registration number of the goods carriage used for transport of goods, details of goods transported, place of origin and destination and person liable for paying service tax.

In case of omission in payment of service tax or procedural lapses by persons liable to pay service tax on the goods transport by road, committed before 31^st December, 2008, the consequences should be limited to recovery of tax with interest payable thereon. No penalty should be imposed on such defaulters unless the default is on account of deliberate fraud, collusion, suppression of facts or willful mis-statement or contraventions of the provisions of service tax with intent to evade payment of service tax.

^^*^^ If service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, service tax should not be charged for the same amount from any other person, to avoid double taxation.

1 Like

Hari Venkata Ramana (M.Com, AICWA) (124 Points)
Replied 18 July 2009

Under GTA service tax is liable to be paid by the person who pays Transportaion charges to GTA, whether he may be consignor or consignee.

If the consignor claims the transportaion charges in his bill seperately (assum that he is a supplier also), the payment you are making to him is in the form of cost of supplies but not as transportation cost. In such cases you are not the person who is paying transportation charges. Hence the person who is receiving supplies in this case is not liable to pay service TAx.

It is the person i.e suppler who is collecting the transportation charges from you as re-imbursement and in turn paying the same to transporter. Hence the supplier is liable to pay service Tax under GTA.

These issued are governed by Rule 2(1)(d) of the finance Act.

Ramana

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 19 July 2009

In this transaction the consignor is liable to pay the service tax as he is liable to pay the GTA. He may get the same reimbusred or even have a profit added on that which we do not know. As Ramana says supplier is liable

Sannabasappa (compliance) (22 Points)
Replied 25 April 2011

I have received bill from transporatation they have not deducted service tax? We have to Pay the services tax? and What is the percentage i.e. 75% is exempt and balance 25% or 100% value of inovce amount? Plase help reg this.

Nayan Das (ACCOUNTS MANAGER) (981 Points)
Replied 25 April 2011

YOU WILL PAY FULL AMOUNT TO TRANSPORTER . IF YOU HAVE SERVICE TAX REGISTRATION THEN YOU WILL PAY TOTAL GROSS AMOUNT X25%=TAXABLE AMOUNT X 10.3%(SERVICE TAX AMOUNT)=SERVICE TAX . IF YOU NOT HAVING THE REGISTRATION THEN YOU HAVE NO LIABLE TO PAY SERVICE TAX

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 25 April 2011

Originally posted by : Sannabasappa
	I have received bill from transporatation they have not deducted service tax? We have to Pay the services tax? and What is the percentage i.e. 75% is exempt and balance 25% or 100% value of inovce amount? Plase help reg this.

You have to pay the full value to trnasporter

you have to pay 2.5% + edu cess+ S&HSEC of such value to service tax department

service tax is charged above the transport cost, payable by the user its not to be deducted from transporter.

Vinayak Kelkar (Proprietor) (23 Points)
Replied 09 September 2011

if the consignee is paying transportation charges for RM purchase and he is not collecting any transportation from party to whom he is selling, do he still need to get registered for ST even if his total transportation exps doesnt exceed Rs. 10 Lakh. If yes then do he need to pay ST with abetment and can he collect it from party? please advise at the earliest

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 09 September 2011

Dear Kelkar,

No threshold limit has been defined under Rule 2 (1) (d) to be liable to pay service tax. If you are not falling under the category of persons specified in the above rule you need not bear the service tax. Rule 2 (1) (d) of Service Tax Rules reads as follows:

"Person liable for paying service tax" means,-

(v) In relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is,-

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948)

(b) any company formed or registered under the Companies Act, 1956 (1 of 1956)

(d) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India

(e) any co-operative society established by or under any law

(f) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder or

(g) any body corporate established, or a partnership firm registered, by or under any law,

any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage"

First confirm whether you fall under any of the categories mentioned, so that specific answers to your query can be given.