SERVICE TAX ON CARGO SERVICE

[Rajeev Khulbe]

Good evening to all my great experts,

I am again hare to get your valuable answer. As per service tax rule, in case of G.T.A service tax is payable by service receiver. but sir in some case in G.T.A some service provider like TCI XPX OMAXE LOGISTICS GATI LTD. ETC. charge service tax in their bill Sir can you tell me the reason why they charge service tax in their bill under gta

thanks for your valuable reply

[Ganeshan Kalyani]

Sir, the name mentioned by you in your query seems to be of service provider not providing direct GTA service. Even though they may be providing such service but they may charge service tax on some background. The intention behind such levy would be known from them (service provider) only. The basis would not come to know to others. Only a wild guess may be made. Thanks.

[Rajagopalan Ranganathan]

Sir,

As per rule 2 (d) (B) of Service Tax Rules, 1994, "person liable for paying service tax 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.

In respect of above categories if GTA pays the service tax, the Department will take a stand that GTA is required to pay the service tax and the service tax is payable by consignor (freight paid cases) or consignee(freight payable cases) and demand will be raised against consignor or consignee. The Department will argue that service tax paid by GTA cannot be recognised as payment of service tax and they can claim the refund from the Department on the ground that GTA has paid the tax though they are required to pay. However they are cas law in which CESTAT has held that if GTA has paid the tax it cannot be demanded from consignor or consignee as the case may be again and if it is done so it will amount to double taxation.

[KASTURI SETHI]

Sh.Rajiv Khulbe Ji,

Regarding GTA Service, ST is to paid prefrence-wise as under :-

(1) Consignor

(2) Consignee

(3) GTA

If consignor does not pay, then consignee is required to pay ST on the element of freight. In case neither consignor nor consignee pays the ST on the freight, then GTA (Transporter) is required to pay ST. If the Cos. mentioned by you are your consignors, and you are the consignee, then those Cos. are right in issuing such invoice.

[KASTURI SETHI]

Sh.Rajiv Khulbe Ji,

In continuation of my reply dated 2.8.2016, I agree with Sh.Rajagopalan Ranganathan Sir, to the extent that there must not be double taxation. I also agree with Sh.Ganeshan Kalyani Sir that factual position can be ascertained only after the examination of invoices or agreement, if any.

[JSW CEMENTLIMITED]

All the transporting companies mentioned by you must be providing transportation of goods in containerized vehicle. These companies must be registered under cargo handling service as they do packing, loading and unloading of the consignment, deliver the goods within a time specified. This is the reason behind charging of service tax by these companies.

AI Summary

Service tax liability under GTA rules: consignor first, then consignee, and ultimately the transporter; cargo handlers may charge tax. Service tax liability for road transportation under GTA rules is allocated in priority: consignor, then consignee, and if neither pays, the GTA. When the person liable to pay freight falls in specified categories or is located outside the taxable territory, special liability rules apply, and voluntary payment by GTA may invite recovery though double payment is contestable. Distinct cargo handling activities (packing, loading, unloading, delivery) may attract service tax by the carrier as a cargo handling service, requiring factual scrutiny of invoices and agreements to determine the correct levy.