GTA

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2010 Person A (Individual)paid amount of Rs. 700000/- in a P.Y. to B (transport Agency)against his Goods Transportation charges because the LR was "TO PAY", in this situation who is the liable of service tax and who can avail the service tax credit.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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03 July 2010 Normally the service provider is the person liable to pay service tax. But in case of GTA the person who pays the freight, in specified set of circumstances, is responsible to pay the tax.

You have not mentioned the status of the consignor. If the consignor is one of the specified category, person A is liable to pay. In any other case, B is liable to pay.

In any case, since the the ultimate tax burden is borne by A and it being an input service, tax credit is available to A.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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03 July 2010 On LR , it is mentioned by Transporter who is paid Service Tax, Transoporter/Consignee/Consignor.
If it is not mentioned and service tax also is not charged on LR. Then you have to pay service tax .
If you paid full rate of tax , then you can avail credit of service tax.
If you paid 25% of service tax as per notification of abatement, then you are not eligible for credit.

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Shyam Lal Naik

Shyam Lal Naik (Expert)
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03 July 2010 Dear Sir,

With due respect, beg to partially differ.

If the GTA service is an input service, abetment of 75% is not a bar in taking credit.

Earlier, the abetment of 75% was optional and conditional. The GTA was not to take credit of Inputs and Capital Goods as well as not to claim benefit of notification of 12/2003.

However, wef 01.03.2008, there is an unconditional exemption of 75% in terms of notification no. 13/2008-ST dated, 01.03.2008. Further, the GTA is not eligible to take any credit, as the GTA service has been omitted from the definition of Output Service.

These changes does not have any affect on the eligibility of service receiver to take Cenvat Credit.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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03 July 2010 Dear Mr. Naik,
If any person who is opting Notification 13/2008 for abatement of 75%, then no service tax credit is admissible.

Taking a credit of service tax and abatement of 75% is together is not permissible.
We have face it during excise audit when auditor disallowed service tax credit on the grount that party has paid 25% service tax as per notification 13/2008.

If you have any supporting documents by which it is proved that there is no bar to take service tax credit with abatement.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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03 July 2010 Sir,

We have taken credit on tax paid on GTA service availed by us and my record stood audited.

GTA is not eligible to take credit, as GTA is no more an output service.

There is nothing in Cenvat Credit Rules or in the notification 13/2008 to deny Cenvat to the receiver of GTA Service, provided it is an input service.

Once the condition of input service and payment thereof is satisfied, Cenvat is available, unless specifically disallowed.

In my view, the action on the part of the auditor was not proper.

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CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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03 July 2010 I m also talking about Service Receiptent, not for GTA himself.

Now I also discussed about it with our Account person who is handling excise.
He told that he is not taking credit on it due to above case.
But he disucssed about it at last audit, they told that there is nothing for denying it as well as taking credit.

Thanks for your valuable feedback.
Now I will check it our consultant level for his opinion.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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06 July 2010 Dear Mr. Bansal,

Similar query has been answered in the Service Tax Review Journal at 2010(18)S.T.R. J156, which may also be referred.

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