Amit (Worker) (40 Points)
13 November 2009
Point 1 :- We are the supplier and we pay freight charges to Transporter. But
the transporter does not show / charge Service tax in his
consignment not / Invoice.
Q 1) Tell me whether it is our responsibility to pay service tax on his behalf by
deducting service tax @ 10.3% from the freight charges and pay the
balance freight amount to Transporter?
Q 2) If yes, then we can avail benefit of service tax in cenvat credit?
Q 3) If not, then what precaution we have to take?
Gautam Joshi
(Partner)
(361 Points)
Replied 13 November 2009
Hi Amit,
ST in case of Transportation is falling under GTA Service which is to be paid by one who pays frieght i.e. in your case you are supposed to pay ST (you said you pay freight to transporter). I would like to tell you that while deducting ST you are not supposed to see whether transporter has deducted ST or not on freight amount. Furthermore, you can always avail credit of the same. Furthermore, there are too many exemptions given to GTA Service on certain conditions given in notifications.
Kindly take appropriate advice from consultants.
Warm Regards.
EKALABYA TALUKDAR
(SERVICE TAX CONSULTANT)
(666 Points)
Replied 13 November 2009
DEAR AMIT
YOUR STATUS IS "SUPPLIER / TRADER" YOU BILL THE PARTY INCLUSIVE OF TRANSPORTATION FOR YOUR PRODUCT. YOU ARE NOT A SERVICE RECEIVER. SO YOU DONT HAVE TO PAY SERVICE TAX ON TRANSPORTATION
IF TRANSPORT COMPANY DO NOT CHARGE SERVICE TAX TO YOU IS THEIR HEAD ACHE NOT YOURS
Gautam Joshi
(Partner)
(361 Points)
Replied 13 November 2009
Hi Eklabya and Amit,
There is some misconception on Eklabya's part. Take a look at Reverse Charge Mechanism in Service Tax introduced via Rule 2(1)(d) (V) of Service Tax Rules, 1994 where it clearly shifts ST lilability to one who pays freight.
This sub-clause was introduced beacuse government wanted to remove ST liability which was earlier levied on Transport Agencies. Remember there was a big strike of Truck drivers on this issue and it has affected trade like anything.
So government simply shifted the burden of ST liability to one who will pay freight i.e. either consignee or consigner but he would be certainly not Transport Agency. After this amendment they have also introduced a whole procedure for such collection and payment of ST which requires a thorough understanding of business and a help from ST Consultant which I earlier also suggested.
Pls feel free to ask further.
Warm Regards.
Master GSTR-9 and 9C with India's First Unique Live Course with Live practical training
CAclubindia
