Reverse charge mechanism

2301 views 4 replies

Prashant Bothra

Business Man

31 Points Joined November 2009

Dear All

I have been having some trouble understanding parts of the Reverse Charge Mechanism of the service tax notification dated 20-Jun-12. Please help me out !

1. For GTA, is courier service included?

2. For GTA, Blue Dart / Professional Couriers have charged me service tax @ 12.36%. However, 100% of tax as I understand is to be paid by the recipient. Am I still liable to pay??

3. For GTA, is the 75% abatement still valid? We are a company who do not utilise cenvat credit.

4. Some of my GTA suppliers [Green Carriers and Contractors] have charged only 3.09% service tax whilst others have charged 12.36% - why is that?

5. We charge "Courier Charges" separately in our invoice which we collect from our customers. However these amounts may by 5-8% higher than the actual courier charges in some cases. What is my service tax liability in that case?

This is quite urgent so please do reply ASAP guys!

Prashant Bothra

Replies (4)

CA. Narottam Kumar Rawat

Indirect Tax Consultant

399 Points Joined October 2008

Dear Prashant,

There is difference between GTA and Courier Services. Courier services are time sensitive.

Courier services do not fall under Reverse Charge.

There is no relation of CENVAT credit taken by service recipient for benefit of abatement. To avail benifit of Abatement one has to look whether that transport agency is taking CENVAT Credit or not. For this purposes you may take a declaration from Transportor.

In case transportor charged service tax on invoice, still you are liable to discharge you liability under reverse charge, it is my suggestion not to pay service tax to transportors and pay yourself.

Manoj Agarwal

Service Tax Consultant Rourkela Service

3456 Points Joined March 2012

100% Correct @ Shri Narottam Rawat

satya

Executive Excise

1839 Points Joined January 2008

Dear Expertz,

Please clarify;

some of Transport companies viz,TCIXPS,TCI FREIGHT etc, are charging ST as 3.09%, we are taking credit of that ST, and we are not concluding these frieght amounts for paying GTA Service Tax under RCM for receipients (ours is a Ltd company).

Is this practice correct or not?

CA. Narottam Kumar Rawat

Indirect Tax Consultant

399 Points Joined October 2008

Dear Mr. Sathya,

You company is liable to pay service tax under Reverse Charge, you can not get benefit of that transportor paying service tax therefore we are not liable to pay.

Please do your compliance.

My suggestion not to pay service tax to transporters.