Service tax on transport of material under road construction

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Gaurav Bhutani

Proprietor

24 Points Posted on 14 November 2011

Friends,

Contractor "ABC & Co" has been awarded a contract of Construction of Road of 50KM. "ABC & Co" has given a sub contracted to "JQK & Co" for Part Construction of Road of 25KM area. "JQK & Co" has given a contract to "XYZ" (Proprietor Firm) to transport the material (i.e. Gitti, Sand, etc) to "JQK & Co" site. The material which "XYZ" is transporting is owned by "JQK & Co".

As per service tax circular some of the service are exempted under service tax which include "Contruction of Rod & Bridges" and even the sub contrator are exempted under it.

Our query is service tax is laiable to "XYZ" (Transport Contractor) ?

Regards,

Gaurav Bhutani

Attached File : 552961 867317 circular no 147 16 2011 of service tax.doc downloaded: 184 times

Replies (3)

CA Unnikrishnan Nair N

Chartered Accountant

2114 Points Posted on 16 November 2011

Service provided by XYZ is not construction of road, bridge etc. hence the benefit of exemption may not be available. Service provided by XYZ is classifiable under GTA for which no such exemptionis available. Circular No.147/16/2011 dated 21-10-2011 is relevant.

Gaurav Bhutani

Proprietor

24 Points Posted on 17 November 2011

Sir,

As XYZ is under GTA and working for "JQK&Co". Therefore the libality of paying service Tax is of "JQK & Co" as it is an organised company under the Service Tax Notification mentioned below.

Is this is right or not?

Notification No. 35/2004-Service Tax, dated 3rd December, 2004 prescribes that the

person making payment towards freight would be liable to pay the service tax, in case the

consignor or the consignee of the goods transported in one of the following,-

(i) Factory registered under or governed by the Factories Act;

(ii) Company established by or under the Companies Act;

(iii) Corporation established by or under any law;

(iv) Society registered under Societies Registration Act or similar law;

(v) Co-operative society established by or under any law;

(vi) Dealer of excisable goods, registered under the Central Excise Law; or

(vii) Any body corporate established, or a partnership firm registered, by or under any

law.

Regards,

Gaurav

CA Unnikrishnan Nair N

Chartered Accountant

2114 Points Posted on 17 November 2011

What I have answered is that the infrastructure based exemtion is not available to GTA service. In your case the GTA service is taxable and the liability is on JQK & co under reverse taxing.