Service Tax on Transport bills which they are not claiming

[Anil Kumar]

I have a clarification on Transportation bills, we are manufacturing of effluent treating plants, we receive lot of chemicals in tankers, some of the registered transporter billing us with out service tax in their bills, though they are registered with service tax, In this kind of case, do we need to pay the transport amount only as he billed it, or do we have to pay the service tax on his behalf?, please help in this and clarify.

thanks

Aneel

[Rajagopalan Ranganathan]

Sir,

What is your status under Company's Act or Partnership Act? According to rule 2 (d) (B) of Service Tax Rules, 1994“person liable for paying service tax”, -

(B) in relation to service provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is,-

(I) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(II) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

(III) any co-operative society established by or under any law;

(IV) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

(V) any body corporate established, by or under any law; or

(VI) any partnership firm whether registered or not under any law including association of persons;

any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage:

Provided that when such person is located in a non-taxable territory, the provider of such service shall be liable to pay service tax.

From your narration I infer that you concern falls under any one of the categories, namely (I) to (VI) above. Therefore the transporter has presumed that you are liable to pay service tax as receiver of the service and hence he has not charged service tax in his bill. Therefore as receiver of the service you have to pay the service tax and you are eligible to take credit of the same provided the service rendered is in respect inward transport of you raw materials/capital goods etc.

[S G]

Hi Anil,

The transport is not charging service tax due to the reason that the liability to deposit service tax is on the person who is paying freight under reverse charge mechanism.

I am reproducing the para as reffered in Not. No. 30/2012-Service Taxdated 20-06-2012:

the Central Government hereby notifies the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said sub-section, namely:-

I. The taxable services,-

(A) (ii) provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is,-

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

(c) any co-operative society established by or under any law;

(d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons;

As you mentioned that the company is manufacturer so definitely the company has taken the factory registration and accordingly the company is require to pay service tax under reverse charge mechanism.

Thanks!!

AI Summary

Reverse charge on goods transport services: recipient must pay service tax; input credit possible for inward transport. Service tax on road transportation by a goods transport agency is payable under the reverse charge when the person liable to pay freight is a factory, society, co-operative society, dealer of excisable goods, body corporate, or partnership firm; in those cases the recipient must pay the service tax and may claim input credit where the service relates to inward transportation of raw materials or capital goods.