Service Tax Liability transporting manufactured goods using own truck

[TAPAS MAITI]

ABC Pvt Ltd is a manufacturer of excisable goods, deliver its manufactured goods using own truck to the buyers premises. Is there any service tax liability to ABC Pvt Ltd?

[Anish Goyal]

In this regard refer to the new judgement of :

2014 (11) TMI 925 - MADRAS HIGH COURT

Other Citation: 2014 (35) S.T.R. 500 (Mad.)

CCE., SALEM Versus SUIBRAMANIA SIVA CO-OP. SUGAR MILLS LTD.

[Akash Deep]

it all depends on whether the goods had been sold before transporting. if the property in goods has not been transferred from manufacturer to buyer before transporting them and the risk of damage regarding goods is still with the manufacturer and remain so till delivery of possession of goods to the buyer, no service tax liability would arise as in this situation manufacturer would be transporting his own goods. As there is no Service provider- service recipient relationship .

however if the property in goods has been already transferred and sale of goods has already been completed, a service tax liability would arise on transportation of goods by using trucks. if the buyer of goods who is paying freight or any other person paying freight on behalf of buyer is covered under person specified Rule 2(1)(d)(v)(B) of Service tax Rules, 1994.buyer or person paying freight on behalf of buyer would be liable for paying service tax, if the buyer or person paying freight on behalf of buyer is not covered under above mentioned persons, ABC Corp would be liable for paying service tax.

I have assumed that destination of goods is within the taxable territory only.

AI Summary

Service tax liability on goods transport depends on transfer of property; seller transporting own goods not taxable, otherwise payer liable. Service tax on transporting manufactured goods using the manufacturer's own truck depends on whether property in the goods has passed to the buyer before transport: if ownership and risk remain with the manufacturer until delivery, no service tax arises; if sale is complete and property has passed, the transport service is taxable and liability falls on the buyer or person paying freight if specified by rule, otherwise on the transporter. The analysis assumes movement within taxable territory.