Service tax on freight (reverse charge query)

Dear Sir,

In case of GTA service normally service reciever is liable to pay service tax but in your case as service provider has already charged service tax in the invoice therefore you are not liable to pay it anymore as it will amount to double payment of service tax.

Regards,

Thanks stuti, is there any clarification or circular or anything else by department on this issue?

Even if the service provider has paid entire service tax it cannot absolve the service receiver from payment of service tax. He has to discharge its service tax liability. Department may demand service tax from the service receiver.

The view is also supported by  judgement of  Vantage Security v. CCE (2007) 7 STT 300(CESTAT SMB) where service tax was paid by service receiver, though it was payable by service provider. It was held that payment is invalid and demand of service tax from service provider is valid.

There are contradictory judgment also.

Non payment of service  tax may be prone to litigation.

Dear Nitin,

In your case , service provider has charged Service tax in invoice and the service receiver has payed the amount (Including service tax portion).

Eventhough the service receiver has payed the same to service provider, he(receiver) is still held liable to the Service tax department for the portion of amount he is supposed to remit to the department. 

I disagree with STUTI - If so the idea behind implementing REVERSE CHARGE MECHANISM will go in vain.

So  Finally service receiver has to remit his part of service tax(eventhough the service provider has charged it on the invoice) along with interest for late remittance if any...

Service Receiver liable if one ofthe declared person. Provider not to charge, collect or pay in such cases.

Where A proprietor Do Two business One For Decorative Material & One for which There is Registrtion under factories act whether freight paid on Material Inward of Decorative material Business also liable for service tax 

The service receiver should deduct the service tax wrongly charged by GTA and SR must pay tax directly to the exchequer. If SR is ready to contest upto CESTAT, he could get relief based on various precedents when the Tribunal has held the demand from service receiver as amounting to double taxation.  The SR will need to proof that the tax paid by him to GTA has actually been deposited by GTA with the CG.