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Gta service

akash malhotra (student) (88 Points)

30 March 2013

CLARIFY GTA SERVICE WITH SOLID EXAMPLE.

ACTUALLY IN OUR OFFICE ( I AM NEW IN MY OFFICE) , CLIENT BRING OUTWARD FREIGHT AMOUNT AND INWARD FREIGHT AMOUNT I.E 1012546.00 AND 867146.00 RESPECTIVELY. WE ADD THIS AMOUNT AND PROVIDE ABATEMENT UNDER NOTIFICATION NO. 26/2012 AND ON REMAINING WE CALCULATE SERVICE TAX.

BUT I HAVE MANY DOUBT

1 IN MY VIEW , IN CASE OF GTA SERVICE SERVICE RECEIVER IS LIABLE TO PAY TAX.

2 AS MY CLIENT IS SERVICE RECIVER ( HE IS MEDICAL ORNAMENTS MANUFACTURER ) AND HIS LIABILITY IS RESTRICTED TO INWARD FREIGHT , WHY IN OUR OFFICE OUTWARD FREIGHT IS ALSO CONSIDERED

MAKE IT CLEAR WITH SOLID EXAMPLES, I SHALL BE NERY THANKFUL TO YOU

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2 Replies

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 30 March 2013

Dear Akash

You need to refer N/N 30/2012 before applying abatement mentioned in N/N 26/2012.

The aforesaid notification states that in case the specified person(as mentioned in the notification,e.g. company, society,etc.) is the person liable to pay the freight, then that person is liable to pay under reverse charge, otherwise the liability lies on GTA only.

Lets take two examples to understand the same:

Example 1:

XYZ Ltd.(i.e. consignor) hires a GTA(company/non-company) to transfer the material to Mr. A(i.e. consignee,assuming that he is not the excise dealer) and it is written in the agreement that the freight shall be payable by Mr. A directly to GTA, then in this case no reverse charge shall apply... Since, an individual is not amongst the specified persons as listed out in the notification & Service tax liability shall be borne by GTA(if it is not specified in the mega exemption list set out in N/N 25/2012)

Example 2:

Suppose, if in the above example, if the freight is payable by XYZ Ltd. to GTA instead of Mr. A, then here reverse charge shall apply, since the body corporate is the specified person.

So, in nutshell, it doesn't matter whether the freight is inward or outward, but wat matters is who is the person liable to pay the freight.

You might have seen the consignment note(commonly called as Builty) marked as "Paid" or "To pay"

Hope now, the concept is clear to you.

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CA Kumar Mukesh (CA CMA FINAL and Advance Excel Trainer) (6881 Points)
Replied 30 March 2013

You have vouch each & every GRN (Goods repeipt note) of each consignment to see whether Service tax is charged by Transporter or not. However as per my experience Transporter's are always issue GRN which contains Service tax will be paid by receiver

there 75% abatement is available on STA service further this can be used as Cenvat with some restriction over outward freight, but 100% on inwards