Exemptions of Service tax for GTA Service

What are the exemptions available on GTA Service on the basis of goods involved in the consignment?

As per notification no.25/2012- ST amended from time to time, services provided by way of transportation of following is exempted from levy of service tax:

i. Agricultural produce;

ii. including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages;

iii. Chemical fertilizer, organic manure and oil cakes;

iv. Newspaper or magazines registered with the Registrar of Newspapers;

v. Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or

vi. Defense or military equipments;

vii. Cotton, ginned or baled.

Note: As per Section 65B (5) of Finance Act, 1994 “agricultural produce” means any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market

Is there any exemptions based on the value of consignment?

Yes. Mega Exemption Notification No. 25/2012-ST as amended has exempted low value consignments from the levy of service tax, as follows:

(a) Where the gross amount charged for the transportation of goods on a consignment transported in a single goods carriage is upto Rs 1,500/-or

(b) Where the gross amount charged for transportation of all such goods for a single consignee in the goods carriage is upto Rs. 750/-

i. The first situation is where consignments are transported in a goods carriage and the total freight does not exceed Rs. 1500/- in total.  In such case there is exemption from service tax, even if the goods are carried by a motor vehicle against different consignment notes.

ii. Second situation covers an "individual consignment” transported by a GTA for a particular consignee.  In such a situation if the gross amount charged for transport of these goods is Rs. 750/- or less; then thatconsignment will be exempted from service tax.  The limit of Rs. 750/- is with reference to each truck load carried for a particular consignee.

iii. In simple words, Where the gross amount charged for a consignee is less than Rs.750/-, there is no problem since the goods transporter will raise the bill to consignee accordingly and he will know that there is no need to pay the tax. The problem arises only when the gross amount charged on the consignments in a goods carriage is less than Rs.1500/-, particularly when consignee’s charges are more than Rs.750/-. Hence in a specific case where consignee’s charges are more than Rs.750/- and the gross charges including all other consignments are less than Rs.1500/- , consignee has to ask the transporter to indicate the same in the bill.

Illustrations:

- A company receives goods from a GTA in a truck. No other goods are loaded in that truck. The company pays freight of Rs. 1500/- to GTA. No service tax is payable by any person on this consignment as it is exempted under first category.

- A company receives goods from a GTA in a truck. The company pays freight of Rs. 700/- to GTA. No service tax is payable by any person on this consignment as the value of consignment is less than Rs.750/- it is exempted under second category.

- A company receives goods from a GTA in a truck. Some other goods not belonging to the company are also loaded in the truck. The company pays freight of Rs. 800/- to GTA. The freight of other goods is Rs. 500/-. Service Tax is not payable by the company on this consignment as the total freight for the truck is Rs. 1300 (<1501) so it is exempted.Here in this case company should ask the GTA to certify that the gross amount charged on all the consignments in a goods carriage is less than Rs. 1500/-. In such a case, consignee will have proof for claiming exemption under the first category.

- A company receives goods from a GTA in a truck. Some other goods not belonging to the company are also loaded in the truck. The company pays freight of Rs. 800/- to GTA and freight of other goods is Rs. 900/-; then the total freight for the truck is Rs. 1700 (>1500). Freight paid by company is Rs. 800 (>750). So, exemption is not available and the company should pay service tax on Rs. 800/-.

A partnership firm engaged in manufacture has paid freight for a quarter as below. What is the service tax liability?

Here, the partnership firm is liable to pay service tax under reverse charge. The consignment in a single vehicle with freight upto Rs. 1,500 is fully exempted.  Single consignment of freight upto Rs. 750 is exempted. So, service tax on balance Rs. 5,74,620/- @ 3.09% = 17,756/-

Note:

Notification No. 26/2012-ST dated 20-06-2012 has allowed abatement of 75% on GTA. This abatement can be availed by the person liable to pay service tax on GTA. In other words, in case of reverse charge, the service recipient can avail abatement and pay tax @ 3.09% and when reverse charge is not applicable, than the GTA can avail abatement and pay tax @ 3.09%. However, availment of this abatement subject to the conditions specified in the notification.