applicable of service tax

[Gaurav Agrawal]

1. we are providing the transportation service by road and issuing consigment note to the party which act as transporter.

we are not having any truck but from market through broker we arrange and supply to pvt. ltd. co. for transportation of there goods and tds will be deducted under sec.194

The payment received from party to me fully on my account and from that i paid to owner driver of truck.

my question is that the diffence of margin is act as commision to me or not and i have fully authority to change my rate as per my accordingly.

sholud i cover in defination of GTA (GOODS TRANSPORT AGENCY) by fulfillment of condition 1.

whether differnce of margin act as commission on which service tax is liable.

AS per sec. 68REVERSE CHARGE MECHANISM TO ME AS I PROVIDE SERVICE TO PVT .CO.

I received a notices from Service tax officer said that margin for me is commission and we are liable to pay servicce tax on it.

AS per Intermediary defination by Rule 2(f) IT EXCULDED ME

i only providing main service of transportation of good to service to consignor and consignee on my account as firm name.

 

[KASTURI SETHI]

Have you received a Notice or simple letter ?

[Rajagopalan Ranganathan]

Sir,

In my opinion the difference in margin earned by you is commision and the same is for providing business auxiliary service or business support service to owner/driver of the truck. Therefore the demand made by the Department is correct. The service tax on GTA service provided by you will be paid by the consignee of the goods under reverse charge mechanism.

[mitesh dutt]

Hallo Kasturi Ji,

i have a question,

my company is a franchise solution provider, we have a client which is a Singapore based company which has an Indian establishment as well,

we are raising a invoice on that company, they are asking can we raise invoice on name of their Indian establishment, they want service tax to be charged. everything is fine however they want invoice should be in USD.

is it possible to raise invoice in USD by an Indian company to another Indian establishment?

[KASTURI SETHI]

Sh.Mitesh Dutt ji,

Singapore based Co. is Head Office or Main Company and in India they have a branch office and this branch office is working for and on behalf of their Main Company based in Singapore.

Write both addresses on the invoice. First Branch Office and Second Head Office based at Singapore. In my view invoice in USD can be issued. Invoice should be addressed to both as under:-

Billed to Singapore based Co. Complete address

Service Provided to Branch Office of Singapore Co. (Complete Address in India)

Service Tax should be paid. Foreign exchange should come in India.

Any further query. Post separately in this forum.

[Gaurav Agrawal]

i m issuing consigment note and goods by transport by road.

[KASTURI SETHI]

Sh.Gaurav Aggarwal Ji,. In my view you are excluded from the definition of 'Intermediary' in the situation described by you. It is profit and not commission. Hence out of purview of ST. Regarding GTA service ST is to be paid by the person who pays freight.

[Mr Rao]

Dear sir,

I am also of the opinion that the difference of margin is a profit to you and applicability of service tax does not arise in the said scenario. You being proprietorship concern providing service to body corporate, the reverse charge mechanism is applicable and the consignee i.e. pvt.ltd company is liable to pay service tax. I agree with the views of Shri Sethiji.

[KASTURI SETHI]

Beautifully explained by Sh. Bhaskar Rao Sir. I also thoroughly examined the issue and the situation before posting the same in this forum. I consumed too much time to understand the issue. Thanks to Sh. Bhaskar Rao Sir for liking my reply.

[Gaurav Agrawal]

thank you for replying me.

sir there was any case or judgement there by those preference i will help to explain the fact of officer regarding my case that it is not treated as my commission but it is my business profit.

[KASTURI SETHI]

When law is very much clear, why do you want to take shelter of case law. If you purchase and sell any goods and earn margin and account for in your accounts, that margin is profit. If you do not purchase any goods and facilitate in causing the sale by connecting two persons and sale proceeds are not accounted for in your accounts and margin accounted for in your accounts is commission. This is difference between the two terms. However, I shall trace out case law if there is any and post the same on this forum.

[Gaurav Agrawal]

thankyou sir

AI Summary

Service tax liability on margins treated as business profit; consignee liable under GTA reverse charge mechanism. The margin earned by an arranger who issues consignment notes and collects freight on its own account is characterised as business profit (not commission) and the arranger is excluded from the intermediary definition; where the activity is a Goods Transport Agency service, service tax liability attaches to the person who pays freight (the consignee) under the reverse charge mechanism.