Service Tax on Goods Transport agency

This query is : Resolved

Neelam Prakash Sharma (Querist)
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15 March 2011 Sir, my query is:-

Company A has got a contract from of maintenece, repair of road from NHAI which is an exempted service as notification issued by tax authorities.

Company B sale raw material(stone crushed, bajri, stone dust) trough GTA to company A, where the payment of service tax liability shifts on consignor or consignee who pays freight. In my case company A pays freight to GTA but says it will not pay service tax as it is providing exempted service and will not be in a position to offset it or recover from customer which increases its cost.

my question is can service tax can be exempted as output service provider is itself providing exempted service or through any other route.

Regards,
NP.Sharma
CA&CS