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Service tax on transporter

Jitendra Singh (Article and audit assistant) (54 Points)

01 February 2016

Hello all members, The situation is transporter A giving its truck to another transporter B so that transporter B can give GTA service to his customer. The consignment note is issued by transporter B. Now, the query is whether transporter A is giving any service to transporter B. If yes, please state the service and its treatment as per Service Tax rules. Whether transporter A is liable for any service tax payment. TIA, Jitendra

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3 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 01 February 2016

/forum/gta-service-tax-applicability-303607.asp

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CA Aravind Penugonda (Chartered Accountant) (311 Points)
Replied 01 February 2016

Dear Mr. Jithendra Singh,

Services of giving a means of transportation of goods to a Goods Transport Agency is exempted from service tax by way of Sl. no. 22 (b) of Notification No.25/2012-ST dated 20.06.2012.

Ajay Chandramouli (Article Assistant ) (334 Points)
Replied 02 February 2016

Dear Mr. Jithendra Singh,

Here there are three parties and three contracts

1.Customer 2. X ltd 3. Y Ltd

Contract of Customer with Y ltd is taxable and accordinly service tax needs to be dischraged by customer under reverse charge.

Now Y ltd approaches and avail the services of X ltd. The approach and contract can be of two types

Case - 1 GTA service

If the terms of contract places the risk of safe transportation of goods entirely on X ltd and a consignment note is issued then the service is in the nature of GTA and accordingly Y ltd needs to discharge service tax under GTA

Case - 2 Supply of Tangible goods

If the terms of contract is only for supply of vechicle and X ltd is no where responsible for the transportation of goods of ultimate customer then the exemption under 22(b) of 25/2012 is applicable as said by Mr.Aravind

The invoice shall also indicate only amount for the period for which vehicle is hired by Y ltd.

Note : Applicable VAT provisions needs to be examined