is Transport by road taxable under service tax

This query is : Resolved

Vinay (Querist)
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15 October 2010

Our company is availing services from transporters through road.

but ,they are charging single service tax on their service bill.

is it confirmed ,they are exempted from service tax liability.

Vinay Kale

haridhayalan

haridhayalan (Expert)
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15 October 2010 dear vinay, please refer below:

Date of Introduction: 01.01.2005

Definitions:

“goods carriage” has the meaning assigned to it in clause (14 ) of section 2 of the Motor Vehicles Act, 1988(59 of 1988). Section 65 (50a)of the Finance Act, 1994

“goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called Section 65 (50b)of the Finance Act, 1994

“taxable service” means any service provided to a customer, by a goods transport agency, in relation to transport of goods by road in a goods carriage. Section 65(105)(zzp)of the Finance Act, 1994

Value of Taxable Service:

The value of taxable service shall be the gross amount charged by the service provider for providing such service and the money value of any other consideration ( if any) received for providing such service. The value of taxable service shall be determined as per the provisions made under section 67 of the Finance Act, read with Service Tax (Determination of Value ) Rules, 2006

( For provisions relating to abatement please see ‘Exemptions’)

Who is responsible to pay Service Tax:

The service provider is responsible for payment of Service Tax. (Section 68 of Finance Act, 1994). However, in relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is,

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
(b) any company established by or under the Companies Act, 1956 (1 of 1956);

(c) any corporation established by or under any law;

(d) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India;

(e) any co-operative society established by or under any law;

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

(g) any body corporate established, or a partnership firm registered, by or under any law, any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage;”

Scope of Service:

The scope of the service covers any service provided by the goods transport agency in relation to transport of goods by road in goods carriage. Goods Transport Agency is any person who provides service in relation to transport of goods and issues a consignment note ( by whatever name it is called). The consignment note should be serially numbered and it should contain name and address of the consignee and consignor, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax, whether consignee or consignor or the goods transport agency.

Exemptions:

1. Notification No.32/2004 dated 03.12.2004– Abatement of 75% on the gross amount charged for providing the service, subject to the condition that no credit of inputs or capital goods is availed while providing such service. This Notification has been rescinded vide Notification No.2/2006 dated 01.03.2006. However, the same benefit of abatement is provided vide Notification No.1/2006 dated 01.03.2006

2 Notification No.33/2004 dated 03.12.2004– Exemption to transport services rendered by an agency in relation to vegetables, fruits, eggs and milk

Notification No.34/2004 dated 03.12.2004– Exemption to GTA – subject to condition that amount charged is Rs.750 / Rs.1500