Service Tax on GTA on Despatches made on Ex-Works basis

[saket s]

Request your opinion on Service Tax on GTA against the transaction as explained below.

· Consignor of the goods is a Limited Company.

· The Consignees are not one of persons mentioned in Rule 2(1)(d)(v)

· Consignor despatches the goods to Customers/buyers on Ex-works basis.

· Transfer of property takes place at factory gate.

· The Customers/buyers take the material from Consignor’s premises on following ways:

(a) The Customers/buyers bring their own vehicles and take delivery of the material

No Consignment note issued

OR

(b) On request of Customers/buyers, the Consignor arrange the transportation of goods through GTA on Freight-to-pay basis.

The GTA issues consignment note (Lorry Receipt) on To-pay basis and collect Freight charges from consignees after delivering the goods.

· Normally the GTA is not registered under Service Tax except some reputed transporters like TCI

· Since the billing is on Ex-works basis, the consignor is not discharging service tax on GTA though the consignor is one of the person mentioned in Rule 2(1)(d)(v) as the freight charges are not being accounted in the books of consignor.

We understand that neither consignee nor GTA discharging service tax on GTA on above said situation mentioned at (a) & (b)

In this connection, we request you to give us your opinion on liability of Service Tax payment (Consignor/Consignee/GTA)

Thanks

AI Summary

GTA service tax liability: payer of freight bears tax in ex works shipments; otherwise the transporter is the residual taxpayer.
Liability for service tax on GTA services in ex-works shipments depends on who pays freight: buyer-transported pickups attract no tax; where freight is payable by the buyer on delivery, the buyer is ordinarily liable to discharge service tax (with input credit if available); if neither consignor nor consignee is statutorily liable, the GTA remains the residual taxpayer, though GTAs frequently do not pay and disputes arise.