Service Tax Local Hire Charges

[Guest]

Dear Sir,

We are a company/firm into business of Works Contract and trading of goods. We charge Service Tax and VAT on pour sales. We also provide local transport service through our own truks to our client for smooth delivery of sold goods. We charge hire charges seperatly from them on the basis of Debit Note. My query is whether we have to charge Service Tax on Hire charges collected from clients. And if Yes then on what amount (any abatment )

[Ganeshan Kalyani]

Sir in my view only GTA service is a taxable service. You are using your own vehicle to transport the sold goods only to deliver it to customers place safely which is not a role of a GTA. Therefore no service tax. But it may prone to litigation. Thanks.

[KASTURI SETHI]

Dear Sir,

Using own trucks for transportation of goods to your customers is out of the definition/scope of GTA. De jure, I concur with the views of Sh.Ganeshan Kalyani, Sir.

[DR.MARIAPPAN GOVINDARAJAN]

When the vehicle is hired service tax liability is there.

[KASTURI SETHI]

Yes. I agree with Sh. M.Govindarajan Sir. Thanks a lot for completing the reply.

AI Summary

Service tax on local transport: classification as GTA or vendor-owned delivery determines tax liability and litigation risk. Whether hire charges for use of a seller's own trucks to deliver sold goods attract service tax turns on classification: one view treats vendor-operated deliveries as outside the Goods Transport Agency scope and not taxable, while an alternate view treats separately billed hire charges as a taxable hire/transport service. Contributors note litigation risk and leave valuation and abatement unresolved.