Payment of GTA by Proprietorship Firm

[Rajesh Sharma]

Dear Sir, I have a proprietorship firm in the manufacturing activity but not registered under Factory  Act. My question is whether I have to pay service tax on the freight/transportation paid by our firm. As I do not fall in any of the specified category of persons list. My doubt is category (a) says 'any factory registered or governed by the Factories Act', therefore, do our firm fall under this category due to manufacturing activities, though we are not registered under Factory Act.

Your early response is appreciated.

[Brijesh Verma]

You will fall under this definition if you are registered under Central Excise, though being a proprietorship Firm 

[Rajesh Sharma]

Dear Sir, thanks for your reply, but in my view thats not correct, if I have proprietorship firm and registered under central excise, the condition says

"any factory registered or governed by Factories Act",

it says about FACTORY ACT and not about central excise. And to be registered or governed by Factory Act, a firm should have more than 10 workers (if factory working with aid of power) or 20 workers if working without aid of power. Therefore, condition for Factory Act must be satisfied.

Would like to know your views on that point.

[Brijesh Verma]

Dear Rajesh ji

 

Please peruse the following extract of NN 30/2012 and decide accordingly. 

(ii)   provided or agreed to be provided  by a goods transport agency in respect of  transportation  of goods by road, where the  person liable to pay freight    is, -

            (a)  any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

            (b)  any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

            (c)  any co-operative society established by or under any law;

            (d)  any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

            (e)  any body corporate established, by or under any law; or

            (f)  any partnership firm whether registered or not under any law including association of persons;

AI Summary

Goods transport agency liability: proprietorships taxable only if governed by Factories Act or registered as excise dealer. Obligation for GTA service tax applies only where the freight-paying person falls within specified categories: factories registered under or governed by the Factories Act, societies, cooperative societies, bodies corporate, partnership firms, or dealers of excisable goods registered under the Central Excise Act. A manufacturing proprietorship not registered under the Factories Act does not meet the factory limb and therefore is not captured on that ground; it would be taxable only if it qualifies under another listed category such as central excise registration as an excise dealer.