GTA Services

This query is : Resolved

Nitesh Sethiya (Querist)
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10 February 2009 Dear All,

I have one pvt ltd company and received raw material from the suplier. but on transportation of raw material we have not paid service tax on such transportation.

Now I got a notice from excise dept. that ur liable t pay service tax from dated 01-01-2005 hence pay such amount of service tax with the interest and file return?

Tell me that there is any notification or clause or case law so we cans safe ourselves from the same.?

Pls reply.....

Dayal

Dayal (Expert)
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26 April 2009 The service recepient have been made liable to pay service tax on freight .

The department has rightly raised the enquiry.

It is payable form 01.01.2005.

GTA services has no relevance to the nature of business. It states that who so ever is paying freight for the transportaion of goods and falls under any of the said categories is liable to pay service tax.
As per rule 2(1)(d)(v) of Service Tax Rules, Consignor or consignee who is paying freight will be liable to pay service tax, if consignor or consignee is any one of the following –

any factory registered under or governed by the Factories Act, 1948 (63 of 1948)

any company established by or under the Companies Act, 1956 (1 of 1956)

any corporation established by or under any law

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

any co-operative society established by or under any law

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

any body corporate established, or a partnership firm registered, by or under any law

Regarding Not no 34, it exempts the value of taxable service ( freight) for 75% i.e service tax is payable only on 25% of the freight amount

Further this 25% is subject to conditions that the goods transport agency has not availed any Cenvat credit on inputs or services received for providing the said services of transport of goods by road.

For this purpose a declaration from the transporter is required to be aquired by you to justify that he has not availed any Cenvat credit in view of the above notification.