Service tax query

Queries 750 views 8 replies

Guest

Mr. A purchases goods from Mr. C. In order to get delivery of the goods, Mr. A hires Mr. B (Goods Transport Agency). Transport charges are thus incurred and paid by Mr. A to Mr. B. Mr A – the consignee, Mr. C – the consignor and Mr. B – GTA, all are proprietary business firms.

Who is liable to pay service tax in this case?

What if the GTA issues consignment note saying that the service tax is payable by the consignee?

Please explain the treatment before and after July 1, 2012

Replies (8)

Guest

in case of transportation it is the liability of the recipient of service to pay service tax.

in this case Mr. A hired the GTA so Mr. A is liable to Pay service tax.

CA CS SUMIT GUDDEWAL

Employed

297 Points Joined February 2009

Mr A is liable to pay service tax as freight is being paid by him

sanjay singhal

987 Points Joined June 2007

Its right before 1st of july 2012. Is there any change after 1/7/2012.

Guest

No change, 100% service Tax liability is of the Receipient of the Service. however there is 25% abatement avilable.

Guest

I think GTA is liable to pay service tax where the person liable to pay freight is Individual or HUF or Proprietor. Payer of the freight is liable only when the payer falls under specified type of entities which doesnt include individual or HUF or proprietor. In above case since all three parties are proprietors, GTA will be liable. Someone please confirm.

Manoj Agarwal

Service Tax Consultant Rourkela Service

3456 Points Joined March 2012

Dear Mr. Pankaj,

W.E.F 01-07-2012, Notification no. 30/2012 has shifted the 100% liability on GTA Service on the service receiver i.e. is the person liable to pay freight, (Mr. A) in this case, as quoted below:

The Taxable Services: "(ii) provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is,—

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

(d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons;

So, IF Mr. A (proprietor) falls under the above catagory, pay 100% Service Tax on GTA under RCM. Otherwise, the transporter (Mr. B) is liable to ST, who can claim abatement of 75% under notification no. 26/2012 ST and pay ST on only 25% of GTA Service @ 12.36%.

Note: Individual consignments where freight is less than Rs. 1500 per goods vehicle is exempted transportation of goods like fruits, vegitables, milk, eggs, pulses and food grains is fully exempted.

Regards,

Manoj (tax2001-it @ yahoo.com)

Guest

Sl. No. Descripttion of a service Explanation Effective service tax rate applicable to recipient Effective service tax rate to be charged by provider Service recipient's liability Service provider's liability Effective date 2 Services of goods transport agency in respect of transportation of goods by road Covered: Transportation of goods by road through a GTA which issues a consignment note, by whatwever name called. Excluded: Courier, express cargo, Carriage of certain food/drink items, consignment upto Rs. 750/-. 3.090% - 100% - 01-Jul-12, This was in effect even before finance act 2012.

Manoj Agarwal

Service Tax Consultant Rourkela Service

3456 Points Joined March 2012

I completely failed to understand what Mr. Santosh Ji wants to convey. Regarding exemption of consignments upto Rs. 750, it's applicable when the goods carriage is carrying multiple consignments of multiple consignors and the freight liability of service receiver is Rs. 750 or less.