Service tax on GTA

[Murari Agrawal]

Hello Experts. We are engaging local vehicle owners for carrying our goods who are not issuing any consignment note. Is service tax payable by us on the freight paid to them.

Second, one of such vehicle owner is owning more than one vehicle and is carrying our goods in such vehicles. He is submitting a bill for freight on weekly basis and payment to him is made by cheque and since the amount exceeds Rs.75,000 we are deducting TDS. Will the position change in such case.

[YAGAY andSUN]

Dear Murari,

Under Notification 30/2012-ST/20-06-2012 w.e.f. 01-07-2012 service recipient is liable to pay the service tax under the taxable services. Knowingly, non issuance of Consignment Note, may attract panel consequences.

Regards,

Team YAGAY & SUN,

(Indirect Tax Consultants)

[Mahir S]

Service tax is payable on all freight inward and outward.

Deducting TDS has no relevance with payment of service tax by the recipient in respect of GTA.

[Murari Agrawal]

After posting my query on the Forum, I consulted a consultant whose view is contrary. He says the definition of GTA under section 65 (50b) of the Finance Act, 1994 is "Goods transport agency" means any person who provides service in relation to transport of goods by road and issues consignment note by whatever name name called.

Since we are utilising the services of individual vehicle owners who are not issuing C.N., the same is out of purview of the GTA definition and hence service tax is not payable by us.

So far as not.no.30/2012-ST/20.6.12, it only refers to the services provided by a GTA. If the service does not fall under purview of GTA definition, this not.is not effective.

He has also cited a number of CESTAT judgements. I mention here only one -  M/s Caps & Prints (P) Ltd vs. Commissioner of Service Tax, Kolkata.2013(1) TMI 432 - CESTAT KOLKATA

Kindly look from this angle and clarify.

[SHIVKUMAR SHARMA]

Dear Mr Murari

I am 100 percent agreed with the opinion given by your consultant & you need not to pay service tax on such type of transaction as the same is not covered under the notification No.30/2012 of ST.& GTA defination also.

SHIVKUMAR SHARMA

[MUKUND THAKKAR]

Dear Murari,

I am agree with view  your consultant, but  definition  is  blocked  with the limit  word and,

definition  is  not   mention that  issue of  C.N , if  service  receiver  is  not  taken care  to collect  the documents  from service  provider it is not  fault  of  dept. it  scope  in service receiver. so according  to me  service tax  is  applicable.

Mukund Thakkar

[KASTURI SETHI]

As desired by my dear friend, Sh.Ganeshan Kalyani, Sir, I express my views as under:-

W.e.f. 1.7.12 definitions of classification of services have been omitted. Therefore w.e.f. 1.7.12 ST is to be paid on the basis of service. No classification exists now. For convenience of the assessees accounting codes exist (without legal force) for statistical purpose.The onus is cast on assessee to determine which service he is providing. An assessee is to ascertain the admissibility of abatement and RCM. As per definition of 'Service' under Section 65 B (44) of the Act, there are two parameters for payment of ST. These are:

1. Service must be provided by a person to another person. It means there must two persons involved i.e. Service Provider and Service Receiver.

2. Service is required to be provided for 'Consideration'.

To qualify a service two parameters must be qualified. If even one parameter is missing, it would not amount to 'Service' as per this Section.

Now I come to the present issue.

In this case goods have been transported by road. Nobody can deny this. It means service has been provided to another person. Thus first parameter stands conformed to. Secondly, payment of ₹ 75000/- has been made. Thus service has been provided for a consideration. Second parameter also stands conformed.

In view of the above reasoning, Service Tax is leviable/payable. Whether consignment note has been issued or not, that is relegated into the background. This criteria is applicable for all services not only for GTA. Hence I go with M/s Yagay And Sun,Sirs, Sh.Mukund Thakkar, Sir and ShNaveed S, Sir.

[KASTURI SETHI]

Sh.Murari Agarwal Ji,

Does Section 65(50b) mentioned by you in your reply dated 28.3.14, exist after 1.7.12 ?

Pl. enrich my knowledge really. I am also not perfect.

[Ganeshan Kalyani]

Thank you Sri Kasturi Sir for submitting your valuable reply.

With due respect i am still not able to convince myself on the query. Sir though the service category is for statistical purpose but whenever an assesse has to decide on the applicability of service tax then he go by the service classification and evaluate the applicability. The Notification has mentioned Service Provided by a Goods Transport Agency. The word agency is driving my mind to think whether an individual vehicle owner is an agency and answer is NO. Second point that trigger me why Consignment note is specifically mentioned. There is some essence in putting said word. Further in my view individual owner of the vehicle would provide service for running his family , for his livelihood , to meet his needs. Whereas the Agency take up activity for business, to make profit. Government tax the business and Agency therefore are liable but an Individual remains to be outside the purview of tax. This is what I view. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

As per legal dictionary meaning the word , 'Agency' also includes an individual. Agent or Agency connects two persons i.e. Principal and consumer/customer. Agency or agent works on behalf of principal and does the job for customer. Suppose if A is owner of a truck and lifts the goods from a factory and delivers to the buyer without getting himself registered as GTA and without issuance of consignment note (required to be issued as per interpretation of GTA under Section 65 B(26) of the Finance Act) but receives consideration either from owner of the factory or from consignee for transportation of goods by road; Do you think a truck owner who has, de fecto, provided the service of transportation of goods by road and has received consideration for this service without issuance of consignment note, can go scot free from the service tax network ? Not at all. Such person is covered under Section 65 B(44) of the Finance Act. The activity carried out by the truck owner even in a individual capacity conforms to the definition of 'service' under Section 65 B(44). When no definition of 'Agency' is given under Service Tax law, we have to borrow it from allied acts or legal dictionary. As per dictionary meaning, individual is included in 'Agency'. Regarding livelihood or earning for profit whether in individual capacity or in the form of Agency, it is business of providing taxable service. No difference.

In above scenario, non-issuance of consignment note shall be treated as modus operandi for evasion of ST in the eyes of the department. In such situation truck owner in individual capacity cannot come out the noose of law i.e Section 65 B (44).

Looking forward for response from you or another expert or visitor of this forum.

[KASTURI SETHI]

If detected, SCN will be issued to truck owner, factory owner and receiver of the goods as ST on freight is to be paid either by GTA or Consignor or consignee.

AI Summary

Debate on Service Tax Applicability for Local Goods Transport Without Consignment Notes Under Notification 30/2012, Section 65B(44) A discussion on service tax applicability for goods transported by local vehicle owners without issuing consignment notes. The initial query questions whether service tax is payable under such circumstances, especially when payments exceed Rs. 75,000 and TDS is deducted. Responses vary, with some experts asserting service tax is due regardless of consignment notes, citing Notification 30/2012 and Section 65B(44) of the Finance Act. Others argue that without consignment notes, these services fall outside the Goods Transport Agency (GTA) definition, thus exempting them from service tax. The debate highlights differing interpretations of legal definitions and tax obligations.