input service tax on GTA Agency creditable or not?

[Guest]

dear experts,

we are manufacturing of pump and motor and we require RM. for making a finished goods .

we are paying freight TO GTA . on my RM. received from vendor against my question is that

1) Can GTA (Transporter ) charge service tax in his L.R. according service tax law ?

2) if yes , then we are eligible to take credit of input service tax?

3) if GTA (Transporter) charged service tax in his L.R. still we are liable to pay service tax according to service tax law?

pls. reply so we can go in proper way..

regards,

Manan Pandya

[YAGAY andSUN]

Dear Manan,

Either consignor or consignee is liable to pay the freight under GTA and whosoever pays the freight is also liable to pay the service tax under this taxable category as mentioned in the Notification No. 30/2012-ST/20-06-2012 w.e.f. 01-07-2012.

However, ST paid on Inward material is eligible for availment of CENVAT credit.

Regards

Team - YAGAY and SUN

(Consultants - Business, Management and Indirect Taxation)

[Guest]

Perfact anwer

But add this also, If matrial being sent out for Jobwork purpose you can also take credit for Outgoing as well as incoming GTA ST paid

[Guest]

dear experts,

thank you for your prompt reply , still i have a little doubt

i want to clarify my first question that

1) can transporter charge service tax in his L.R. ?

because according notification number 30/2012 it shows that Percentage of service tax "payable by the person receiving the service".

because i am receiving transport service and "a transporter issues us LR. and he is chargins service tax in his lr. and i paid to that transporter total freight value including service tax value.

pls. guide and reply as early as possible.

regards,

Manan pandya

[Guest]

The reverse charge liability under section 68(2) of the Act is a statutory liability imposed by law. The liability of service provider and service receiver is different and independent of each other. Even when the service provider (GTA) has wrongly charged service tax in bill, the liability of service receiver is not discharged. So, it is suggested that the person paying freight shall deduct service tax charged by the GTA and pay only the freight amount to the GTA.

[Guest]

dear expert,

thank you so much for your prompt reply...

now i am clear about this concept. i really appreciate for your reply.

regards,

Manan pandya

[PAWAN KUMAR]

Dear Sir,

The reply of Mr.Chandra is correct. The liability under Trasnport of goods by Road through the service provider GTA is on the person who actually pays the freight to GTA which can either be Consignee or the consignor. If GTA itself is charging service tax on its bill, It is wrong. Please ask the GTA to change the bill accordingly becuase as per the law service receiver is 100% liable for service tax under Notificaiton No.30/2012-ST dated 20.06.2012. If GTA charged service tax, please do not pass the said amount of service tax to him. Only basic freight is to be passed.

AI Summary

Reverse charge on goods transport agency services: recipient liable for service tax; input credit available on inward supplies. Service tax for Transport of Goods by Road via a GTA is payable by the person who pays freight under the reverse charge mechanism; a GTA charging service tax on its bill does not discharge the recipient's liability and the recipient should not pass that charged tax to the GTA. Input service tax (CENVAT) on inward materials transported by GTA is eligible for credit, and similar credit treatment can apply for jobwork-related inbound and outbound movements, subject to applicable CENVAT rules.