Cenvat credit on gta input service

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 August 2011 Hello Frens...

Can any one help me with the following query. Kindly quote case law or circular/notification.

1. Service tax paid on behalf of transporter which is Input Service for the company. Service tax paid after abatement (i.e. 25% of the 10.3%). Since this is the Input Service, can company take CENVAT Credit of the Service tax paid?

2. What declaration needs to be obtained from transporter whether it has fulfilled the abatement condition? If no declaration obtained, still company can pay 25% s.t. on behalf of Transporter or required to pay full 10.3%?

sachin alwadhi

sachin alwadhi (Expert)
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07 August 2011 yes u can take input credit of service tax paid on incoming material not on outgoing material shippment.

u need to take only consignment note only.u have to pay only service tax on 25% value u need to verify transporter has service tax registration no or not.

Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2011 I would like to clarify on the issue:

Here I am the output service provider of "Inland Water Service". Where I am providing door to door service, from destination port till customer door I am hiring transport service and pay service tax on behalf of Transporter (which I understand as Input service). Since here I am consignor, and transporting good of my customer by hiring transport service to customers door, can I take Cenvat credit of service tax paid on Input Service?

I am also collecting transport charges (not actual but after adding my profit margin- Yes I have GTA service tax registration also) from my customer. So do I have to charge service tax on such amount? Because I am GTA also liability to pay service tax will be of customer (if company/ co operative etc).

For question number one - as per circular number Circular No 137.85.2007 consignee taking input service of GTA (irrespective of tax paid by consignor or consignee)will be eligible to take cenvat credit of service tax paid.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2011 So kindly please suggest me

Querist : Anonymous

Querist : Anonymous (Querist)

14 February 2012 Please reply

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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19 July 2024 Based on the information provided and the clarification sought, let's address your queries step by step:

### Query 1: Can I take Cenvat credit of service tax paid on Transport Service (Input Service)?

As an output service provider of "Inland Water Service," you hire transport services to deliver goods from the destination port to the customer's door. Here’s the breakdown:

- **Input Service Eligibility**: According to Circular No. ____, consignee (in this case, you as the service provider) can avail Cenvat credit of service tax paid on transport services, irrespective of whether the tax is paid by consignor (the transporter) or consignee (you). Therefore, you are eligible to claim Cenvat credit on the service tax paid for the transport services hired to deliver goods.

- **Documentation**: To claim the Cenvat credit, ensure you have proper invoices from the transport service provider clearly indicating the service tax amount paid. The invoices should also specify the nature of the service provided and its relevance to your business operations.

### Query 2: Service Tax Liability on Transport Charges Collected

Since you are also registered as a Goods Transport Agency (GTA) and you collect transport charges (including your profit margin) from customers, here’s what you need to consider:

- **Service Tax Liability**: As a GTA, you are liable to pay service tax on the transport charges collected from your customers. The liability to pay service tax on GTA services typically falls on the service provider (you) unless the service receiver (customer) is an individual or specified category covered under reverse charge mechanism (RCM).

- **Invoice Requirements**: Issue invoices to your customers for the transport charges collected, including the service tax component. Ensure the invoices comply with service tax invoice rules and include all required details such as your GTA registration number, customer details, service description, and service tax amount.

### Conclusion:

1. **Cenvat Credit on Transport Service**: Yes, you can avail Cenvat credit on the service tax paid for transport services hired to deliver goods to your customers
2. **Service Tax Liability on Transport Charges**: As a GTA, you are required to charge and collect service tax on the transport charges you bill to your customers. Ensure compliance with invoicing requirements and remittance of service tax to the government.

It's advisable to consult with a tax advisor or chartered accountant to ensure compliance with current regulations and to maximize your eligibility for Cenvat credit while managing your service tax liabilities effectively.