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Service tax on gta/cargo handling

Lokesh Poddar (Executive) (55 Points)

16 May 2013

We received services of Gati Ltd and Safexpress for transportation of goods by truck/lorry. Their persons come to my factory and take the goods in lorry then deliver the same to the place of customer (full truck load). They are charging service tax on full value of transportation. Does this service falls under the category of GTA?. If yes, then they must be given abatement of 75% to us. Please share your valuable opinions asap. Thanks.

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3 Replies

CA Chandrashekar L (Practicing Chartered Accountant) (245 Points)
Replied 16 May 2013

Point No.:1

As per Section 65(50) of Finance Act, 1994 as amended "Goods" has the meaning assigned to it in clause (7) of section 2 of the Sale of Goods Act, 1930 (3 of 1930).

As per Section 65(50a) of Finance Act, 1994 as amended “Goods carriage” has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

As per Section 65(50b) of Finance Act, 1994 as amended “Goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

From the above it is clear that the service you have received falls within the GTA Services.

Point No.:2

In my opinion charge of service tax on full value of GTA service is due to avail CENVAT credit on inputs, Capital goods and input services which is used for providing the taxable services by the service provider, which may be addtional burden on the service receiver.

Point No.:3

If Reverse charge Mechanism is applicable to your case, than 100% of service tax as to be paid by you.

ie Service Receiver .

Thanks & Regards,

CA Chandrashekar L

1 Like

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 22 May 2013

The issue requires to ascertain whether the service is GTA or courier. Mere transaportation of goods normally does not connote - speed and accompayment directly or indirectly.

Express cargo has been understood by the courts as nothing but courier.

If it is courier then the question of being a GTA would notbe there.

It appears that GATI & Safeex are working as courier in this case and if so the charge by them is correct. You have no liability for payment as receiver. Only you may avail credit if related to incoming material or intermediate movement if paying ST or ED.

3 Like

Lokesh Poddar (Executive) (55 Points)
Replied 23 May 2013

Thanks madhukarji... But I regret that still i am not clear.

1) Express cargo defined as packaging, loading and unloading of goods from door to door by time sensitive delivery. If one transporter is loading the goods from pickup point and deliver to the destination within expected time, then does it be treated as express cargo ? If he fails to deliver the goods within expected time and delayed the delivery by 1-2 days then does it be treated as GTA ?

2) I am working with non-cenvat route (Not 30/2004) hence I am not availing input credit of ST. In this case, I like to deduct the st charged by Gati/Safex and then deposit st after claiming abatement. Because of credit can not be availed by Gati/Safex then I think they must not have any objection. Could department raise any objection on this procedure ? Gati/Safex are providing me docket at present, I can ask them to provide me consignment note instead of docket.

Request to please suggest your expertise opinion. Regards and thanks in advance.

Lokesh Poddar +91 98269 15174