Service tax on gta , consignor or consignee??

Our supplier is hiring a transporter for supply of goods to our premises.

The transporter is paid by supplier.

Supplier in his bill to us is claiming the supply value and transportation charges. A copy of transporter bill and consignment note is attached. Same amount of freight is being claimed by supplier as reimbursement.

However in the consignment note the transporter has indicated that service tax is payable by consignee i.e us.

Pls clarify as to whether we are liable to pay service tax to govt irrespective of not paying freight directly to transporter??

Replies (2)

"service tax is payable by consignee" this is general statement written by almost all transpoters in their consignment note.

In case of GTA service receiver of the service is liable to pay service tax exept few exceptions; in your case it is supplier(receiver) who has taken the services of transporter to delievr the goods at your door step. technically it is the supplier who has to pay the service tax by creating reverse charge.

The fact that he is getting the transportation charges from you by way of reimbursement of expenses does not change the nature of transaction and its taxability; even in various judicial pronouncement it has held that reimbursement of expenses does not attract service tax liability.

 


 

Well explained by CA Pradeep. For more details on GTA, you may CLICK here.

 

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