Service Tax on GTA Supply.

[MANOHAR KALBURGI]

Respected Sir/Madam,

Where GTA being a proprietor rendering services to private limited company and proprietor (this proprietor is also GTA). All the transactions covered by TDS u/s 194C and same parties names are reflected in form 26AS. The services given by GTA to GTA case the fright charges are paid by the company and also consignment note is issued in the name of company.

Questions:

1. When GTA gives service to private company is this transaction is liable for RCM as per Notf'n 30/2012-service tax.

2. When GTA gives service to GTA where the freight charges is paid by the ultimate consumer(company), whether this transaction covered under notf'n 30/2012-service tax.

Thank You in Advance.

[KASTURI SETHI]

Dear Sir,

A person who bears freight will pay Service Tax as per Explanation No.1 of Notification No.30/12-ST dated 20.6.12 as amended from time to time. In the instances given by you, the company bears the amount of freight, so the Company is liable to pay Service Tax. Otherwise also in the both the instances , Service recipient is body corporate and freight stands paid by the Company (Body Corporate. The Proprietorship firm has given service to the body corporate and body corporate has paid freight.No question of FCM.

Explanation-I. - The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

During Service Tax era, preference-wise ST payment of Service Tax on the amount of freight for transportation of goods by road was in force as under :-

First preference : Consignor

Second preference : Consignee.

Third preference : GTA in case first and second preference fail by any reason.

[MANOHAR KALBURGI]

Respceted Kasturi Sethi Ji,

To put it more clear the case where the GTA (proprietor-1st GTA) giving service to one more GTA (proprietor-2nd GTA), here receiver is also a GTA who directly requests 1st GTA to transport the goods to body corporate. In the consignment note consignor is 1st GTA and Consignee is the Body Corporate where fright is paid by body corporate itself.

Later Body Corporate pays the transportation charges to 2nd GTA and then 2nd GTA pays the transportation charges after doing TDS u/s 194C to the 1st GTA.

Is this transaction still falls under notification under 30/2012?

Is 1st GTA still liable to pay service tax?

[KASTURI SETHI]

Dear Sir,

2nd GTA was playing the role of intermediary services. Second GTA would pay ST on the amount of commission or profit (by whatever name it is called) he received, if threshold exemption limit of ₹ 10 lakhs crossed.

Now consignor (First GTA) and Consignee (body corporate) are in picture.

1st GTA is consignor (Proprietor) and that person was providing GTA service to body corporate (consignee) on the directions of 2nd GTA. Consignee (body corporate), de facto, received transportation service (GTA). RCM is applicable to actual consignee (body corporate).

[MANOHAR KALBURGI]

Thank you very much sir. Much appreciated!

AI Summary

Service Tax Liability in Reverse Charge Mechanism for Goods Transport Agency Services Under Notification 30/2012 Discussed A discussion on the applicability of service tax under Reverse Charge Mechanism (RCM) for Goods Transport Agency (GTA) services was initiated. The query involved scenarios where a GTA (proprietor) provides services to a private company and another GTA. The main concern was whether these transactions fall under Notification 30/2012-service tax. The replies clarified that the company, as the freight payer, is liable for service tax under RCM. When a second GTA acts as an intermediary, it pays service tax on its commission if it exceeds the threshold. The body corporate is ultimately responsible for the service tax.