Reverse charge-gta

This query is : Resolved

Hardeep Singh (Querist)
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27 July 2013 Dear experts,
Greetings of the Day!
Please guide on the following matter-
A Ltd. hires a transporter(Ltd. co.) for transportation of materials in or outside the factory and the transporter adds service tax in his bill raised on A Ltd.
Now A Ltd. again books Service tax liability @ 3.09% on total bill amount i.e. (freight+ST charged by transporter @ 3.09%) considering its liability under Reverse charge.
Is it a correct practice followed by A Ltd. and If not, Now what could be done in this regard as co. is under statutory audit.
what would be the case if transporter is an INDIVIDUAL?
Please reply as soon as

CA Parmeshwar Rathi

CA Parmeshwar Rathi (Expert)
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27 July 2013 by the virtue of Reverse charge mechanism, in case of GTA services, 100% service tax would be paid by the 'receiver' only if constitution is:
(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;
(c) any co-operative society established by or under any law;
(d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons;

This is to be noted that in case of GTA, if receiver is any of above, provider would not be liable to collect or deposit the service tax, in spite of being 'company'

IN YOUR INSTANT CASE, actually your company is liable to deposit the service tax as receiver, transporter is charging wrongly, but if once the service tax has been discharged already, so there is no need to provide in your books. you may convey to the suprintendent of your range, about this fact, and get his consent.
REMEMBER, this would not work always, as we can not avoid the litigations in future. you may satisfy the officer at the time of any quary, BUT for safe side, advice your transporter, not to charge the service tax, and put a seal(stamp) on GR's as "Service tax is payable by consignee"