Can Service Tax registered Trader avail GTA input

[Mathurthi RamKumar]

Dear All,

Greetings of the day.

Kindly give the clarifications for below points.

One of the Trader have S.Tax reg.No and doing commission business. He collects S.Tax on commission and paid taxes. Can he avail cenvat input on freight (GTA) payments?

Newly S.Tax registered transport agency (Partnership firm) can collect S.Tax on LR’s? Can transport agency avail input services amounts?

Regards

M.RamKumar

[Rajagopalan Ranganathan]

Sir,

A trader can only pass on the duty paid on the goods dealt with by him and is not expected to pay any duty on the goods dealt with by him. Therefore he cannot avail any credit of duty paid on inputs or input services.

[Rajagopalan Ranganathan]

Sir,

Regarding second part of your query, according to rule 4B of Service tax Rules, 1994 a GTA (Goods Transport Agency) is required to issue consignment note. If the transport agency is not issuing consignment note but issues only lorry receipts then it cannot be treated as GTA and the service provided by it is not liable to service tax.

[PARTHASARATHY V]

Dear Ram,

Trading is exempted services, even if the services involved GTA Services which is not eligible to take service Tax credit, but service relating to BAS is eligible for taking cenvat credit.

Hence you are not entitled to take credit for the GTA services relating to Trading Services.

[KASTURI SETHI]

Regarding reply of first query, I agree with Sh.Ranganathan. W.r.t. reply to 2nd query, I would like to mention that even if consignment note is not issued but actually GTA service has been provided it is taxable and ST has to be paid. Consignment note is requirement of Service Tax law and for this lapse the defaulter is liable penalty.

[YAGAY and SUN]

If there is no requirement to issue consignment note then there would be no service tax applicable on such transactions.

AI Summary

Cenvat credit eligibility: traders cannot claim input credit for GTA services linked to exempt trading activities.
A trader engaged in commission/trading cannot claim Cenvat credit for inputs or input services linked to trading because trading is an exempt service; only credits for taxable activities like BAS are eligible. GTA input credit tied to trading is not available. Taxability of transport services depends on issuance of a consignment note: a GTA should issue a consignment note to qualify, while absence of a consignment note may mean no GTA treatment though some view GTA services as taxable in substance and subject to penalty for nonissuance.