24 March 2013
thank you if A,B,C & d are companies,who is liable to pay service tax under reverse charge mechanism? A OR B OR C OR D?? PLEASE DO CLARIFY
26 July 2024
In the context of Goods Transport Agency (GTA) services under the reverse charge mechanism (RCM), the term **“multiple consignees”** and the applicable service tax implications can be explained as follows:
### **1. Understanding Multiple Consignees in GTA**
**a. **Definition**: - **Multiple Consignees**: When a single consignment is delivered to more than one consignee, each consignee is considered a recipient of the transport service. This situation typically arises when goods are transported to different destinations and are received by different entities.
**b. **Service Tax Limit**: - **Service Tax Limit**: Under the Goods Transport Agency (GTA) service rules, if the value of the consignment transported to each consignee is ₹1,500 or less, the GTA service is exempt from service tax. If the value exceeds ₹1,500 for each consignee, service tax is applicable.
### **2. Liability under Reverse Charge Mechanism (RCM)**
**a. **Reverse Charge Mechanism**: - **RCM**: Under the reverse charge mechanism, the liability to pay service tax is on the recipient of the service rather than the service provider. For GTA services, the recipient (consignee) is responsible for paying the service tax.
**b. **Multiple Consignees**: - **Liability Distribution**: When goods are transported to multiple consignees, each consignee is individually liable for service tax if the value of the service provided to them exceeds ₹1,500. The liability is determined based on the value of the service provided to each consignee separately.
### **3. Practical Scenario**
If companies A, B, C, and D are consignees receiving goods through a GTA, and each company’s share of the transport service value exceeds ₹1,500, the service tax liability would be as follows:
**a. **Individual Liability**: - **Company A**: If Company A’s share of the transport service value is more than ₹1,500, it is liable to pay the service tax for its portion of the service. - **Company B**: Similarly, Company B is liable for the service tax on its portion if it exceeds ₹1,500. - **Company C**: Company C must pay the service tax on its share if it also exceeds ₹1,500. - **Company D**: Company D will pay the service tax on its share if it exceeds ₹1,500.
**b. **Total Service Tax Payment**: - **Separate Payments**: Each consignee should separately pay service tax on their respective portion of the transport service that exceeds ₹1,500.
### **4. Reporting and Compliance**
**a. **Invoice and Documentation**: - **Invoice**: The GTA should provide separate invoices for each consignee or ensure that the invoice clearly indicates the portion of service provided to each consignee. - **Documentation**: Maintain detailed records of the transportation service and the distribution of costs among the consignees.
**b. **Service Tax Returns**: - **Consignee’s Responsibility**: Each consignee should report and pay the service tax in their respective service tax returns, based on their share of the service.
### **Summary**
- **Multiple Consignees**: Each consignee is responsible for service tax if their portion of the service exceeds ₹1,500. - **Reverse Charge Mechanism**: The liability to pay service tax under RCM falls on each consignee separately. - **Practical Steps**: Ensure accurate invoicing and documentation, and report service tax payments in the respective service tax returns.
In summary, each consignee (A, B, C, D) is individually liable for service tax on their share of the transportation service if the value of the service provided to them exceeds ₹1,500.
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