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Service tax applicability

Sandeep (Audit Manager) (81 Points)

24 June 2009

Whether service receiver has to pay service tax even when there is no service tax mentioned in the invoice given by the servic provider(GTA). is it necessary to receive consignment bill, since it is unorganised sector, it is difficult to obtain the same, they just write in a piece of paper and give. Please suggest and any reference to Service tax act, rules, circulars or notifications if any, please mention.

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4 Replies

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 25 June 2009

Please see the articles section for GTA discussions.

In my view only the GTA ( goods transport agent ) is liable. The GTO ( goods transport owner/ operator ) is not the same as GTA and therefore would be outside the purview.

Therefore truck owners who do not issue any document would not be liable. However what they issue is it can be considered as a consiugnment note then there is a possibility that he maybe called the GTA.

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BK Bhargava (Business) (57 Points)
Replied 26 June 2009

Dear Madhukarji,

Thanks for excellent clarifications on various issue.

For common good, to avoid unnecessary compliance under service tax at both ends despite immunity and exemption ,we would like you to please clarify the following.

GTA is a part of service tax . What is difference in between a Agent(GTA) and lorry owner(GTO). What would be the treatment under service tax if GTO directly undertake a particular job for execution without any help of GTA. How Service receiver and service giver would treat that transaction keeping in mind the service tax issue in view of complete immunity/exemption to lorry owner from service tax. Is there any hesitation/legal hinderance in execution of direct job both for service provider as also for service receiver.

GTO whether owning 2-4 -5 trucks/carriers under a siungle entity and makes transactions or having direct/indirect rRegardseceipts by way of gross payment in consideration to trucks/carriers services provided which constitutes more than 10 lacs, what would be status of GTO under service tax act. As regards Income Tax he simply opts for 44AE deeming income @ Rs. 42000 per carrier with no accounts liberty.

Merely a consignment note/builty is not issued will save Truck operator /GTO from the liability of service tax irrespective of gross receipts as consideration/turnover touching/crossing minimum figure directing for making service tax compliance/pay liability under the circular awarding immunity from SERVICE TAX TO TRUCK OPERATORS/CARRIERS/OWNERS.

Regards

AK Bhargava

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 26 June 2009

The GTO was bought in the tax net in 1997 and the GTO s were to discharge the tax. Then after strike the reciover was made liable tp ay which was finally withdrawn as an illegal entry.

In 2004 a new entry GTA ( agent instead of owne/ operator ) was bought inot the tax net. The Honourable FM in his budget speech makes a clear statement that GTOs would not be liable.

The transport industry again opposed the same a committee was formed to look into the matter. They opined that the booking agents for transporters would be liable.

The defintion comes where agents who issue consignment note were made liable. Inspite of more than 6 specific questions to explain the differecne between GTO and GTA to the ministry/ Commissionerates here no clarifications have been forthcoming. However legally the GT owners and operators as per the present provisions would not be liable. This view may not be the view of the revenue.

If you have something specific which I can explain I would be glad to do the same.