GOODS TRANSPORT AGENCY

[RAVI SONI]

M/S XYZand CO. is a Partnership Firm who is registered in Service Tax Department under “ Goods Transport Agency ” as a Service Receiver the firm has taken a transport service from M/S DEFand Co. which is also a Partnership Firm. As per the instruction of M/S XYZand Co. M/S DEFand Co. is supposed to deliver goods to M/S ABC LTD. for which M/S DEFand Co. will charge ₹ 20000/- from M/S XYZand CO. M/S XYZand CO. will charge ₹ 30000/- from M/S ABC LTD. as a transportation charges, in this case I want to know whether M/S XYZand CO. will pay Service Tax on ₹ 20000/- or else on ₹ 30000/- with proper logic.

[Samik Chaudhuri]

Mr.Soni

As per my view M/S XYZand CO will have to pay on 30000/- but it will take credit on 20000 /- against M/S DEF and Co Bill so ultimately M/S XYZand CO will have to pay only on rest 10000/-.

With thanks

Samik Chaudhuri.

[PAWAN KUMAR]

Dear Sir,

As per my view, M/s.XYZ has to pay the service tax on ₹ 20000 paid to company M/s.DEF. However ₹ 10000 which additionally taken from the M/s.ABC will also liable for service tax.

AI Summary

Service tax liability on transport re-billing may attach to the full charge, with input credit available for subcontracted services. Whether a registered Goods Transport Agency must discharge service tax on the subcontractor's charge or on the higher amount billed to the client when it procures transport from a third party and re-invoices the service; one advisory view says tax is payable on the amount billed with credit for tax paid to the subcontractor, the other says both the subcontractor's charge and the additional recovery from the client are taxable.