WHO BEARS THE SERVICE TAX LIABILITY

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srinivasan

Article

36 Points Joined August 2009

Hi Friends,

i HAD RECENTLY FACED AN ISSUE REGARDING DETERMINING THE LIABILITY OF SERVICE TAX IN THE FOLL. CASE.

THERE ARE 3 PARTIES INVOLVED IN THE MATTER.

1) GTA

2) AGENT WHO ACTS ON BEHALF OF PRINCIPAL FOR DELIVERY OF GOODS FROM THE PORT TO THE FACTORY SITE

3) PRINCCPAL

AGENT HAS FIXED A CONTRACT PRICE OF 500RS. A METRIC TONN. AND HAS CHARGED 800 RS FROM THE PRINCIPAL. THE GTA ISSUES AN INVOICE IN FAVOUR OF AGENT WHO PAYS AND DEDUCTS TDS ALSO FROM THE BILL. AS THIS IS A FREIGHT ISSUE, WE ALL KNOW THE RECEIVER OF SERVICE PAYS SERVICE TAX. ALSO WE CHARGE AN INVOICE OF RS 800 TO THE PRINCIPAL WITHOUT ANY SERVICE TAX LIABILITY. HOVEWER WE MENTION INSIDE THE COLUMN THAT THE PRINCIPAL NEEDS TO PAY SERVICE TAX ON RS 800 AFTER CLAIMING 75% ABATEMENT.

MY QUESTION ARISES FOR ABOVE TREATMENT IS CORRECT OR NOT. I DONT FEEL SO AS IT IS NOT A PURE AGENT SITUATION BUT A PROFIT ELEMENT IS FOUND IN IT. NEED YOUR OPINION.BOTH THE AGENT AND PRINCIPAL ARE CORPORATE ASSESSEES

Replies (2)

Jayesh

Sr Article

78 Points Joined April 2009

Dear

I think for GTA liability it is not must that the receiver shout pay service tax it is only Shifted to Service receiver mainly Manufacturer only when it was provided by in the invoice that Servcie Tax to be paid by Consinee in both the Cases i.e. when Receiver pay Ser Tax under GTA takes Cenvat Credit & in second case also that is when Servcie Provider charges service Tax in invoice.

In ur case it is only posible to interprete only if the Agreement between Suppler & Agent and then Agent to Buyer bcoz Agent charging 800Rs instit of Rs.500 that means he must be issuing some invoice..

So it will be better if read the agreement & mainly Service Tax will paid by whome???