Liability of service tax - cenvat credit

[SAPTHARISHI IYER]

A company is manufacturing drums and supplying it to oil PSU. As per contract the company has to transport the goods upto the refinery. A sister concern of the company is the transporter who is not registered under service tax. Company's billing is inclusive of transport cost and excise duty is paid accordingly. If excise duty is paid on a cost inclusive of transportation cost, then is it necessary to pay service tax separately?. If yes then legally who has to bear the service tax liability and if ST is paid can we take credit of the same.

[Rama Krishana]

Service Tax on GTA service is independent to the provisions of central excise. It is immaterial that you include the transportation cost in the value of excisable goods for the purpose of payment of excise duty. Since the amount towards GTA is being paid by the company to the sister concern, in my view the company should discharge the burden of service tax on GTA service according to the provisions of the Service Tax.

[madhavvan n]

since the company is raising a bill which includes transportation cost on which excise duty is charged the question of service tax does not arise, as it has already been subjected to excise duty. ( you cannot have excise duty and service tax on the same transaction) if above option is not followed then the other options and implications ( though you have not made it clear iam listing them below) (i) if the sister concern had raised an invoice either on the company or the oil psu then the transaction would be subject to service tax under gta and since the service receiver is a company the company has to discharge the service tax liability ( there is no need for the sister concern to be regd with service tax it is only the company or oil psu depending on the contract who have to register for gta category and discharge gta liability) (ii)your point on billing is silent since you have mentioned that the sister concern does the transportation is it going to raise a debit note for the charges then service tax would be applicable if entries are passed in books under associated enterprises wherein if any entry is passed relating to taxable services then service tax would be applicable.

AI Summary

Service tax on GTA: including transport in excise value does not eliminate separate service tax liability for the receiver. Service tax on GTA services is independent of central excise valuation: including transport charges in excise assessable value does not by itself eliminate a separate service tax obligation. Where a company pays a related transporter, the company may be required to discharge GTA service tax depending on invoicing and contractual allocation; conversely, if transport has already been subjected to excise as part of the billed value, a contrary view holds that service tax should not be levied again. Debit notes or associated enterprise entries may trigger service tax consequences, and the availability of cenvat credit remains an open question.