Rcm on gta where service provider is a company?

This query is : Resolved

Sreenath (Querist)
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17 June 2013 I would like to know the liability of Service tax on service provided by a Company for transporting goods by road. Here consignor & consignee & service provider are all corporate entities/ companies.
Service provider has charged service tax on the transportation charges on the bill. Should the Consignee company( recipient) who pays the charges deduct & pay to Dept/ pay to Logistics company as charged in their bill?
Please advice.

Ganeshbabu K

Ganeshbabu K (Expert)
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17 June 2013 1)Person liable to pay freight for transportation of goods, located in taxable territory, shall be the person who receives the service. If such person is located in non-taxable territory, the provider of service shall be liable to pay service tax.

2)So one should carefully look on payment terms ,,if as per payment terms if customer is liable to pay freight he is liable to discharge GTA service tax even though supplier paid money to GTA and even though he charges in bill..

3)it can bee see like supplier just paid money on behalf of customer and customer is liable to discharge service tax..it was a possible way out which can be followed by supplier.

4)Tax payable on 25% of value if Cenvat credit has not been availed by service provider. Hence, it is necessary to obtain certificate from the service provider (GTA) that he has not availed any Cenvat credit. Otherwise, service tax will be payable on 100% of the value.Entire tax is payable by service receiver.

Thanks & regards
Ganesh babu k

Sreenath

Sreenath (Querist)
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17 June 2013 Hi Ganesh, Thanks for the prompt reply.

In short, let me explain my understanding:
The service receiver (being company in taxable territory) has to pay service tax @ 25% on 12.36% of bill value on the service received from GTA (even if GTA is a corporate entity).
Only thing is to collect certificate from the service provider that he has not availed CENVAT credit.

I hope this is you explained above..

Thanks & Regards

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Ganeshbabu K

Ganeshbabu K (Expert)
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17 June 2013 Yes ,, it is..

1)GTA is payable only if there is consignment note..

2)local transportation with out consignment note is not GTA service and hence no gta payable

Thanks & regards
Ganesh babu k

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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23 August 2013 even if agency don't issue consignment note, then it doesn't mean that consignor relieve from paying service tax.

after all, consignment note as per rule 4B must be issued.

the idea behind bringing GTA service taxable is on GTA (agency) not on owners...(GTO) operators.