Service tax on transport of goods by road

The transaction between B and C D is taxable as service. If C and D issue consignment note and are GTA then B has to pay service tax and the taxable amount will be 30% of service charges and B has to dispose the liability. If they are not GTA then services of transportation of goods by road is not taxable.

Thank you Mr Kulkarni for so prompt reply.

1. If the transaction between A and B is taxable in any body's hand?

2. B is only a contractor in between contractee and subcontractor. Should it bear the burden of service tax of 14%?. I am asking this question because normally the margin of contractor is not as big as service tax rate.

With Regards,

Mohammad Ayub

Service tax is payable by a person who is liable to pay freight. And whose name the consignment note is issued is the person who usually pays service tax. If B is not a transportation company but onl tu facilitating services and consignment note is issued in name of A and freight is paid by A then A has to discharge the ST liablity. If b is only earning comission then he is also liable to ST as an intermediary.

Dear Mr. Kulkarni,

I am putting my question once again.

The goods of A is to be transported. A will pay the frieght. A asked B to do the transportation. B used the vehicles of C and D.

Regards,

Mohammad Ayub

B is liable to pay the Service Tax. And if B avail CENVAT then he will not be entitled for abatement and he will have to pay the service tax on full amount.

If B do not avail CENVAT Credit he will have to pay the service tax on only 30% of freight amount.

Thank you Mr. Sinha for so nice advice. I am bit confusion of following,

1. Transportaion expense shall be booked by A in its books of accounts.

2. B will have both Transporting income (for billing to A) and Transporting expenses (for billing from C & D).

a. Should B add 30% service tax on its billing to A and deposit the same to the Govt.? In that case would appreciate the section or circular on the basis of which it can be done.

b. Should B pay 30% service tax on the Transporting expenses (for billing from C & D). In such case can B get CENVAT of such amount to be deposited to Govt.? This will cut the margin of B and normally the margin is far below the service tax to be paid.

Would appreciate your suggestion.

Thanks & Regards,

Mohammad Ayub