Service tax on gta

Queries 643 views 2 replies

S SAMPATH

C M (F&A)

30 Points Joined September 2011

Sir,

My company is engaging truck transporters for transporting water and material from our godown to sites for drilling operations. The contract price is inclusive of service tax. There is no consignment note made by the transport contractors. My company is preparing challans with names of officers from sending and receiving sites, with details of materials and the the signature of the driver of the vehicle. Service tax dept is asking us to treat these transporters as GTA and hence to deduct service tax and remit since contract price is inclusive of service tax. Our contention is that since no consignment note is prepared by the transporter, the transport contract is not that of GTA. Please clarify the position on taxability of this service. Is it thr responsibility of the transport contractor to remit service tax and file the return or is it the responsiblity of my company to treat these contractors a s GTAs and deduct service tax and remit?

Replies (2)

Indigo

533 Points Joined December 2009

As per the act for GTA service, its on part of the service receiver to service tax not the service provider if u r company or registered etc. as u r a company its ur liability to pay the service tax. very few services are like this.

In respect of paying ST u cant deduct ST from the bill, the transporter ll not accept it bcas he is not liable and he is not charging it with bill. so u have to pay ST out of ur pocket. may look hard to digest sorry that is wat the act the says.

Regarding the computation of ST part there are two views u treat the thing as inclusive of ST and pay on reverse working basis ie if Bill amt is 100 then its 100*10.3/110.3. but few instances i have seen dept dont accept this stance saying u pay them 100 so y u work reverse working. So it must be paid flat 10.3% on the bill.

U can take 75% exemption on the gross amt charged in the bill. so as said in the above example u have to pay only as 25*10.3/110.3. but one bad news is u cant claim exemption limit of 10lacs to get ur into this service catogory bcas the basic exemption is provided only for service provider not the receiver. so liability starts from the 1st amt itself.

Consignment bill not issued, s many say if no consignment bill no ST liability and there is also specific format of bill to be followed. but no transporter does this. for this cause only the dept in the act dont have the intention to make small truck owners be brought under this and have given exemption in case where the service is for 750 or below or consolidated amt of 1500 chrged no need to pay ST.

many discussions have happened in caaclub related to this topic u can look for it and there are many experts too. check it out.

THis consignment note case i wud like to see many other comment here.