Payment of Service Tax under GTA when consignment note is issued by other transporter

[Yatin Bhopi]

Dear expert

Our CHA raising bills for transportation charges (by road) of export goods from factory to port without Service tax payment. The consignment note is issued by another transporter i.e. CHA is not having his own transport. We do not know whether he is raising bills for reimbursement or with markup price.

In this case whether service tax is payable by us or CHA?,

[Himansu Sekhar]

You will pay the service tax on reverse charge basis

[KASTURI SETHI]

Who pays the freight ? Who bears the freight ? Crucial to determine applicability of ST. I support the views of Sh. Himansu Sha Ji.

[KASTURI SETHI]

No ' cushion' of reimbursement is available in such a situation.

[Yatin Bhopi]

CHA is making payment to transporter.

[(d) “person liable for paying service tax”, -

(B) 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:

but under reverse charge Notification no 30/2012 ST liability of Service tax is on who pays freight and entities mentioned in the notification. But there is no mentioning of Agent.

(ii) 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,-

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(b) 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;

(c) any co-operative society established by or under any law;

(d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons;

Please guide

[Ganeshan Kalyani]

Service Tax is payable by either consignor or consignee whoever is paying freight. In this case it seems that CHA has arranged the transport facility for you and accordingly raised invoice on you. You are liable to pay service tax. I agree with Sri Kasturi Sir. Thanks.

AI Summary

Reverse charge for goods transport agency services: service tax payable by the person who pays freight, not the arranging agent. Liability for service tax on goods transport agency services under the reverse charge mechanism rests with the person who pays or is liable to pay freight. If a CHA arranges transport and pays the transporter but invoices the principal, the principal who pays the CHA is liable to discharge service tax under reverse charge; reimbursement or markup by the CHA does not remove that liability. Agents are not separately treated as freight payers in the reverse charge provision.