Service Tax on GTA on RCM

[TEJASWINI BELOSE]

My client(A) is hiring GTA (B) and providing services to its customers(C). But they(A) are claiming it as transport charges say ₹ 10,000 paid in profit and loss A/c. Also they are recovering the same including their commission of ₹ 15000 from its customers(C) and showing it under Sales in profit and Loss A/c and earning commission of ₹ 5000/- in the transaction. C is paying Service tax under RCM on ₹ 15000/-.Whether in this case B is also liable to pay service tax on RCM basis on ₹ 10,000/-??? Will this not lead to double taxation on part of B if C is paying service tax on entire ₹ 15000/-????

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AI Summary

Reverse charge on GTA services may cause duplicate tax liability when agents reimburse transport and recover charges.
Whether payment and reimbursement of transport charges by an intermediary triggers separate service tax liability under the reverse charge mechanism is raised where the ultimate customer pays tax on the total amount. The issue focuses on whether the intermediary's booking and recovery of transport costs makes it the service recipient liable under RCM, risking overlapping tax, and notes commentators' advice to apply the notified abatement for transport services and to differentiate reimbursements from taxable services.