Service Tax on Transportation

[Ayub Mohammad]

A is a goods seller. Buyers requested for the goods to be transported to buyers place at his cost. Seller arranged transport of goods, paid on behalf of the buyer and collected the money from buyer. If this is pure agent's service or service tax is applicable on such transaction? If applicable, then for which part of service (i.e, providing transporting service to buyer or on RCM for getting transported the goods by truck owners)? This is the questione for F Y 2016-17 & 2017-18.

AI Summary

Goods Seller Transport Service Not 'Pure Agent'; Buyers Pay Service Tax via Reverse Charge Mechanism. Separate Bill Required. A goods seller, referred to as A, arranged transportation for buyers who requested delivery at their cost. A paid the transport fees and collected the amount from the buyers. The question arose whether this transaction qualifies as a 'pure agent' service or if service tax applies. Responses clarified that the transaction does not meet the 'pure agent' criteria. Instead, the buyer, who ultimately bears the freight cost, is responsible for paying service tax under the Reverse Charge Mechanism (RCM). A separate bill indicating the freight amount should be issued, and the buyer should pay the service tax.