service tax on freight paid

[d.v. gupta]

we are a NGO and paying freight to transporter every mont of Rs. 10000.00 for life jacket etc supplied to flood affected people. are we liable for payment of service tax on freight paid. if yes ,then at what rate.

[Guest]

In the case of GTA, Service receiver is liable to pay service tax only if it a factory, co. etc which among others include 'any registered society' or any cooperative society'. NGO, as per my view, are covered under the term societies and therefore would be liable to pay service tax on it. There is no exclusion under service tax in respect of GTA services provided for flood affected people. However, you can claim an abatement @ 75%. Hence, effective tax rate applicable on you is only 2.575%. Thanks

[Brijesh Verma]

I agree with My learned brother Vivek. However, as a matter of fact, tax can only be and rather must only be levied on transport of goods emerging out of commercial transactions. To support my view i would refer to Notification No. 08/2010 which provided exemption to transport of some goods in rail as the same were thought to be of national importance or in public interest. Under that Notification, item no. 4 is "Relief materials meant for victims of natural or manmade disasters, calamities, accidents and mishap" . I personally feel that it is not the "Rail Transport" that is alone sought to be benefitted in terms of transport of such goods. It is rather the kind of goods (as mentioned in the Notification) that are tried to be relaxed. So the same legal Common sence and Jurisprudence must apply to Transport by Road, which applies to Transport by rail...and consequently...your NGO must remain tax free.... For Further clarification you may contact us at [email protected]

AI Summary

Service tax on freight: whether NGOs transporting relief materials are taxable or exempt under GTA rules Whether payment of freight by an NGO for distribution of relief materials attracts Service tax under the GTA regime is disputed: one position treats NGOs as service recipients liable to tax with a 75% abatement reducing the taxable portion; the counterposition argues that carriage of relief materials is non commercial and falls within exemption rationale applicable to transport, so such freight should be tax free.