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Service tax- GTA

Kiran Kumar V (C.A. Final) (181 Points)

17 September 2011

Dear Friends,

As per ST-2 our client registered for Manpower Recruitment or Supply Agency's Services.During the financial year 2010-11 his Gross Receipts3.3 crores. Out of Rs.3.3 crores Rs.3.1 crores belongs to GTA service for which he has not registered.

However, he collected and paid service tax only on Manpower Recruitment or Supply Agency's Services.

As per Reverse Charge Mechanism GTA need not collect service tax. So our client need not pay service tax on GTA service. However, he has registered only for Manpower Recruitment or Supply Agency's Services.

Can he avail Reverse Charge Mechanism Benefit without registering. Please quote section, rule or case law, if any.

With Best Regards,

Kiran Kumar V

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4 Replies

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 17 September 2011

Dear Kiran Kumar,

Please clarify whether your client is providing GTA Service or is receiving Service from GTA.

In first case the answer will depends on the fact whether services are provided to organised sector or not.

In second case, the liability to pay service tax falls on you and there seems to be a default on the basis of information provided by you.

Please clarify.

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Kiran Kumar V (C.A. Final) (181 Points)
Replied 17 September 2011

Thanks for immediate reply.

Our client providing Manpower Recruitment or Supply Agency's Services and GTA service however, he has registered Manpower Recruitment or Supply Agency's Services only. He is providing services to organised sector.

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 17 September 2011

Section 69 of the Finance Act, 1994 contains provisions relating to Registration.

Going by the language of the text which says that:

"Every person liable to pay the service tax under this chapter or the rules made there under shall, within such time and in such manner and in such form as may be prescribed, make an application for registration to the [Superintendent of Central Excise.]",it seems that only when a liability to pay Service Tax arises, a service provider has to get registration. Therefore as far as you are not required to pay service tax you are not required to get service tax registration.

But in your case you are already registered with the department. You should get the name of GTA service included in the Certificate. Though there is no tax on the same, but this should be done to be on safe hand. As given in Rule 4 (5A) of Service Tax Rules, 1994 as amended, You may give additional information to be incorporated in the certificate.

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 17 September 2011

Also as per Rule 2 (1) (d)(V) only in seven cases the service tax is to be paid by service recepient. In case service as GTA is provided to persons other than these seven, service tax liability falls on service provider only.

Rule 2(1) (d)(V) is produced below for reference:

"In relation to taxable service provided by a goods transport agency, where the
consignor or consignee of goods is,-
(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
(b) any company 6[formed or registered under] the Companies Act, 1956 (1 of 1956);
(c) any corporation established by or under any law;
(d) any society registered under the Societies Registration Act, 1860 (21 of 1860) or
under any law corresponding to that Act in force in any part of India;
(e) any co-operative society established by or under any law;
(f) any dealer of excisable goods, who is registered under the Central Excise Act,
1944 (1 of 1944) or the rules made thereunder or;
(g) any body corporate established, or a partnership firm registered, by or under any
law,
any person who pays or is liable to pay freight either himself or through his agent for
the transportation of such goods by road in a goods carriage;]"