GTA Vs. Transproter

[ca c v suryam SURYAM]

Sir,

As per my understanding service tax is payable by the person who is liable to pay freight in the case of GTA transactions.  Now, GTA means the person who acts as a mediator between the consignor/consignee and the transporter.  For example, if A Ltd., engages a truck through an agent M/s. X and if all other conditions are met, then tax is payable by A ltd., under reverse charge. 

Suppose, if A Ltd., engages directly a truck from a transporter say GATTI / SRMT etc., who will discharge tax and they charge the tax also in their bills, then A Ltd., is not obligated to pay the tax under reverse charge.  If this understanding is correct, how A Ltd., proves that the transporter (GATTI / SRMT etc.,) transported the goods in their own vehicles but not engaging vehicle from others by them?  This may be case rearely with GTA also who may own truck.  How to prove to authorities that the service rendered by these persons in the capacity as Transporters but not as GTAs?

Thank you sir,

CA. C V SURYAM

 

 

[Radha Arun]

The query states:"Now, GTA means the person who acts as a mediator between the consignor/consignee and the transporter."

However, the definition in section 65B of the Finance Act 1994 states: (26) "goods transport agency" means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

Therefore, it is not the ownership of the vehicle that is relevant to the issue, so much as whether a consignment note was issued. Consignment note, in turn, is defined in Rule 4B of the Service Tax Rules 1994.

AI Summary

Reverse charge liability depends on consignment note issuance, not vehicle ownership, for classifying a goods transport agency. Service tax liability for road-transport services depends on statutory characterisation: issuance of a consignment note determines classification as a goods transport agency under the service tax rules, and that documentary test-not vehicle ownership-governs whether reverse charge liability attaches to the person liable to pay freight.