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Service Tax on GTA

Venkata Ramana Sriram (Service) (119 Points)

01 July 2010

One of our GTA sevice providers charging service tax on full amount whithout considering the abatement of 75% ?

There is an obligation on the part of consignor / consignee to pay service tax.

Is the service provider is correct in charging service tax on GTA services ?

even after paying service tax as per the bill still whether the consignee is under obligation to pay service tax on 25% of the bill, including service Tax ?

Please clarify in this regard, Thanks in advance ?

Regards,

S.V.Ramana.

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7 Replies

Shyam Lal Naik (Service) (6156 Points)
Replied 01 July 2010

There is an unconditional exemption of 75% of the value of service in respect of GTA wef 01.03.2008. Charging tax on full amount is incorrect. You can modify the invoice to this extent.

If you have already paid the service tax to the GTA and the GTA has inturn remitted the tax to the Government Account, there is no further requirement to pay tax again by you. You should be in posession of a certificate/declaration to this effect from the GTA.

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Bhushan (Article) (91 Points)
Replied 01 July 2010

the service provider can charge service tax in his bill.if u have paid the same to him,then there is no liability to pay service tax to the government.the bills of the transporter in enough evidence to prove tht u have paid the tax to him. However he should be adviced to take advantage of the abatement.

He might COLLECT AND PAY THE FULL TO THE GOVERNMENT AND LATER IF HE CLAIMS THE BENIFIT OF THE ABETMENT,HE MIGHT NOT PASS ON THE BENIFIT TO U.

Dilip Darji (392 Points)
Replied 01 July 2010

Basically Service Tax is payable either by Service Provider or Service Receiver. In case of GTA, Service Tax is payable by Service Receiver. However, if the Service are provided to individual or HUF, it is the responsibilty of Service Provider t.e Transport Agency to pay Service Tax. In view of provision there is no harm in paying Service Tax by Transport Agency. In your case, if you are not individual or HU, than it is not the responsibilty of Transport Agency to Pay service tax.

There is an exemption that Service Tax is payable on 75 % of the value of Services. Service Receiver (Consignor or consignee) is entitled to avail such exemption, subject to the condition that the Transport Agency has not availed credit of duty paid on inputs and CG used in providing taxable service and Transport Agency has not availed the benefit of Noti.1/2003-ST.

There was an objection by CAG that whether Transport Agency is entitled for such exemption or not. Order under 37 B No.5/1/2007-ST dt.12/03/2007 has clarified that Transport agency iis als entitled to avail such exemption, subject the conditions specified.

With above legal background, Transport Agency could have availed exemption of 75 % of the value of Services. But they have not availed. If they have not recovered Service Tax charged by them in their bills, from you, they can very well file a refund claim, of excess Service Tax paid by them.

Regarding payment of service tax by you (Consignor/consignee), it to inform you that once Service Tax is paid by Transport Agency, you need not to pay again..

Rajesh Kotkar (Company Secretary) (68 Points)
Replied 01 July 2010

Dear all,

A Local transport service provider which is not an transport agency and also not registered under service tax issues an invoice which is serially numbered for transport charges for carrying material from the consignor to the consignee for an amount of Rs.1800/- per trip but does not issue an consignment note, whether company is liable to pay GTA for such an transaction.

Kindly give your valuable suggestion for the same.

Regards

Rajesh Kotkar

Shyam Lal Naik (Service) (6156 Points)
Replied 01 July 2010

In view of Finance Minister's Budget Speech while presenting Finance(No. 2) Bill, 2009, not to tax truck owners, but to tax transport agents, one need to find out, whether the service provider is Truck Owner/Travel Agent.

In case the service provider is a truck owner, no service tax. If the service provider is a transport agent, taxable. This ratio has been followed in many tribunal judgments.

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EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 01 July 2010

Originally posted by : Shyam Lal Naik
	In view of Finance Minister's Budget Speech while presenting Finance(No. 2) Bill, 2009, not to tax truck owners, but to tax transport agents, one need to find out, whether the service provider is Truck Owner/Travel Agent. In case the service provider is a truck owner, no service tax. If the service provider is a transport agent, taxable. This ratio has been followed in many tribunal judgments.

IS THERE ANY NOTIFICATION OR CIRCULAR "NOT TO PAY BY ANY TRUCK OWNER"

TRUCK OWNERS MAY SLIP OUT OF NET SO THE "Service Receiver" IS IN THE NET

Shyam Lal Naik (Service) (6156 Points)
Replied 02 July 2010

No such circular. Based on interpretation by Courts. It is a settled law that speech made by the mover of the bill can be relied upon to ascertain the legislative intent. When the service itself is not taxable, there is no reason to tax the service receiver under reverse charge mechanism.