Service tax on GTA

[KIRAN KUMAR]

Dear Sir,

Our company transporting raw material to rented godowns and viceversa for that transporter (Lorry owner) submitting monthly bill.

Please explain the status of Service tax on GTA under reversecharge

Thanks & Regards,
Kiran Kumar

[Rajagopalan Ranganathan]

Sir,

If the Lorry Owner issues a Consignment Note then you are liable to pay service tax on the basis of reverse charge mechanism. Otherwise the service provider (Lorry owner) is liable to pay service tax subject to the condition that his turnover exceeds ₹ 10 lakhs in the previous financial year.

[Ganeshan Kalyani]

Sir, service tax on GTA is payable by a company being, (recipient of service) under reverse charge basis. The definition states that consignment note should be issued by the transporter. If the transporter does not furnish the note to the recipient then the condition is not met and hence service tax is to be paid by transporter himself. Thanks .

[KIRAN KUMAR]

Thanks for the reply sir,

But he was providing monthly bill on his letter pad only and importantly there was no consignment note. In my view consignment note has contain serially numbered ,consigner & consignee name and material details which was transporting. But in our cause our own material transporting to goodown there was no consigner & consignee relationship.

Service tax audit dept given a notice that if you paid freight you are liable to discharge service tax under RCM.

Kindly provide your views and cause laws on this issue.

Thanks in advance

[KASTURI SETHI]

Sh.Kiran Kumar Ji,

What I understand that you mean to say that it is a self-service.(if there is no consignor or consignee as told by you). If it is self service, why the amount of freight has been paid ? Moreover, raising a bill on a letter head is in violation of Service Tax law. If consignor or consignee is not a factory, company, corporation, society, co-operative society, dealer, any body corporate or a partnership firm registered under respective law, then Goods Transporter cannot go scot free. In that situation, Goods Transporter is legally bound to pay ST. It is a statutory duty of GTA (Transporter of goods by road) to issue consignment note. (Rule 4 B of Service Tax Rules, 1994 refers). Non-issuance of consignment note does not absolve Goods Transporter of liability of discharging ST. In a nut shell, in this way, I concur with the views of Sh.Ganeshan Kalyani, Sir.

AI Summary

Reverse charge mechanism applies to GTA services when a consignment note is issued, making the recipient liable for service tax. Liability for service tax on GTA services depends on the reverse charge mechanism and issuance of a consignment note: issuance makes the recipient liable to pay service tax under reverse charge, while absence of a consignment note leaves the transporter ordinarily liable, subject to turnover conditions; non-issuance and informal billing raise compliance concerns but do not automatically relieve the transporter of statutory tax obligations.