Clarification Regarding Payment of service tax under Reverse Charge Mechanisum

[VAMSI KRISHNA]

Dear All,

'A ltd' is goods transport agency, agreed to transport goods of 'B ltd' & 'C ltd' in a lorry. No others goods are transported in that lorry except goods of 'B ltd & C ltd'. For such transportation of goods 'A ltd' charged ₹ 800 & 600 to 'B ltd & C ltd' respectively.

Now my doubt is

1) The above service provided by 'A ltd' is taxable service or not ????

2) If above service is taxable, as per the provisions of 68(2) who are liable to pay tax under reverse charge mechanisum ????

3) Applicability of excemption specified in mega excemption notification (line item 21 of 25/2012)

 

Thanks in Advance

[Rajagopalan Ranganathan]

Sir,

As per Sl. No. 21 (b) of Notification No. 25/2012-ST dated 20.6.2012 (with effect from 1.7.2012) "goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees. Since the total amount charged by the transporter is ₹ 1,400/- (800+600) no service tax is payable either by the service provider or service receiver under reverse charge mechanism.

[Ganeshan Kalyani]

Yes Service tax is not applicable in your case as per Notification 25/2012-ST.

AI Summary

Reverse charge mechanism exemption applies when gross consignment charge in a single carriage falls below statutory threshold, so no tax. Where a goods transport agency transports a consignment in a single carriage exclusively for specified recipients and the gross amount charged for the transportation of goods on that consignment does not exceed the exemption threshold in Sl. No. 21(b) of Notification No. 25/2012-ST, no service tax is payable by the service provider or the service receiver under the reverse charge mechanism.