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Service tax on gta

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aishwarya s raghavan

student

224 Points Posted on 28 March 2013

Dear All!

Please clarify whether in the following instance, B Ltd is liable for service tax under reverse charge Mechanism.

A Ltd. has placed an order with B Ltd for the supply of Equipments. B Ltd, in turn, procures the material from C Ltd, instructing to deliver the ordered equipment directly at the site of A Ltd. C Ltd, transports the material through GTA and claims the transportation charges from B Ltd. In this case, B Ltd liable for payment of 25% of service tax on the GTA bill?

Thanks in advance!

Replies (1)

Manoj Agarwal

Service Tax Consultant Rourkela Service

3456 Points Posted on 29 March 2013

Dear Aishwarya,

As per notification no. 30/2012 (reverse charge), 100% (without abatement) of Service Tax @ 12.36%on Freight paid is the liability of the person who pays or is liable to pay freight, if the person liable to pay freight is, inter alia, a body corporate.

In the above case, C Ltd. is the consignor and A Ltd. is the consignee. So, as far as the service of transportation of goods is concerned, B Ltd. is not in the picture and GTA is not in any way concerned with the B Ltd. Now, if the consignment note says that the Freight is 'To Pay' basis, then A Ltd. is liable to pay service tax @ 12.36%, otherwise C Ltd. shall be so liable.

Note: The ratio of 25% and 75% is applicable if the tax is payable by GTA itself, who is eligible for availing abatement of 75%.

Regards,

Manoj Agarwal (tax2001-it @ yahoo.com)