Liability of service tax on transportation charges

[Shreenivaas Nallur Dharma Rau]

Our company purchased finished goods from various manufacturers after payment of appropriate excise duty. We have directed the manufacturers to despatch the goods to our various depots. They supplied the goods in their own trucks and in some cases they have hired the local trucks for which we have paid the transportation charges extra as per agreement. Now the Excise dept. is demending Service tax from us for the payment of such transportation charges paid to the manufacturers. Our contention is they are the manufacturers and not covered under GTA and hence service tax is not liable for such transportation charges. Your valued opinion with caselaws if any to justify our case is solicited. Thanks & Regards, B.C.Bhat

AI Summary

Dispute Over Service Tax Liability on Transportation Charges: Are Manufacturers Acting as Independent Transporters or Truck Owners? A company purchased finished goods from manufacturers, directing them to deliver to various depots using their own or hired trucks, with separate transportation charges paid. The Excise Department demands service tax on these charges, but the company argues that the manufacturers are not covered under Goods Transport Agency (GTA) and thus not liable for service tax. A respondent suggests determining if the manufacturers acted as independent transporters or as truck owners. If the latter, service tax on GTA applies. The company must ascertain the liable party for the service tax.