EXEMPTION LIMIT ON GTA SERVICE

[Guest]

Dear sir ,

In GTA service exemption from service tax is provided if :-

a)goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
b) goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty;

But recently i found a case law (mad)-cce vs. Suibramania Siva co op sugar Mills Ltd. 2014 (11) TMI 925 - MADRAS HIGH COURT regarding

Scope of Exemption to G T A Service-Rs.750/- Per consignee and ₹ 1500/-per consignment :-

FACTS:

The assessee availed the services of goods transport agency in respect of

transport of sugarcane into the factory and paid service tax on freight Inward

that exceeded ₹ 1500/- but did not pay service tax on the amount of freight

that exceeded ₹ 750/- but was below ₹ 1500/- The department contended

that as per Notification No.34/2004-ST dated 03/12/2004, a limit of ₹ 1500/- in

the said notification applies only in respect of multiple consignments whereas

in case of individual consignment, the said limit is only ₹ 750/- Tribunal

decided in favor of the assessee.

HELD:

Explaining the scope of exemption, the High Court held that as is evident from

the reading of the explanation, individual consignment covered in sub-clause

(2) of the said exemption means all goods transported by goods transport

agency for “a consignee “ In contradistinction to this, fixing of exemption limit

of ₹ 1500/- under sub clause (1) is not limited to the consignment to the

individual consignee but it refers to consignments relatable to more than one

consignee. Thus by making two classifications, the exemption notification limits

its operation based on the consignee, the charges and the consignment.

Therefore, where the goods carried are for the single consignee i.e. assessee alone, the assessee case would fall under sub-clause (2) in which event, when the gross amount charged exceeded ₹ 750/- the tax liability will arise. It was also held that the decision of the Tribunal rendered in favor of the assessee on the ground that individual truck operator did not fall within the definition of“goods transport agency” relying upon the decision in the case of kanaka Durga Agro Oil Products (2009) 22 STT 435(Bang-Tribunal) was relied upon cannot be Upheld

Now my company is transporting its finished goods to its customer (which is a single consignee) at a freight of ₹ 1000 per trip and this amount of ₹ 1000 is paid by us to the gta service provider now are we supposed to pay service tax on it according to this case law or we can still avail exemption bcz we are still within the limit of ₹ 1500 .

please reply asap

prathit maini

[bhart b sharma]

the judgment has to be read in toto to understand its true meaning and ratio. the lines picked up by you (which you think are favorable to your case) . do not represent the whole picture. actually this discussion is about invoking extended period of time which becomes clear as we read further:

In the circumstances, we agree with the Revenue that the question of limitation, does not arise to hold that the demand herein is time barred as per Section 69 of the Finance Act, 1994. As far as the levy of interest is concerned, Section 75 of the Finance Act, 1994 is the relevant provision, which reads as under :

“75. Interest on delayed payment of Service Tax. - Every person, liable to pay the tax in accordance with the provisions of Section 68 or rules made thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at such rate not below ten percent and not exceeding thirty six per cent per annum as is for the time being fixed by the Central Government, by Notification in the Official Gazette for the period by which such crediting of the tax or any part thereof is delayed :

Provided that in the case of a service provider, whose value of taxable services provided in the financial year does not exceed sixty lakh rupees during any of the financial years covered by the notice or during the last preceding .financial year, as the case may be, such rate of interest, shall be reduced by three per cent, per annum”

23. On the admitted fact that the assessee had remitted the tax belatedly and under the advice of their Internal Audit, interest on belated payment being automatic, rightly the Revenue invoked Section 75 of the Finance Act in this case. In the circumstances, we do not find any ground to accept the plea of the assessee herein that interest cannot be demanded on the facts of the case.

AI Summary

Clarification on Service Tax Exemptions: 750 for Single Consignee, 1500 for Multiple Consignments; Interest Applies Under Section 75. In a discussion about service tax exemptions for goods transport agency (GTA) services, a query was raised regarding the exemption limits of 750 per consignee and 1500 per consignment. A case involving Suibramania Siva Co-op Sugar Mills Ltd. was referenced, where the court clarified that the 1500 limit applies to multiple consignments, while the 750 limit applies to single consignees. The query concerned whether a company transporting goods at 1000 per trip to a single consignee should pay service tax. The reply emphasized the importance of understanding the full judgment, noting that interest on delayed payments is automatic under Section 75 of the Finance Act, 1994.