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

NGO Questions Service Tax Liability on Freight for Life Jacket Transport; Debate Over Exemption for Relief Materials Transported by Road. An NGO inquired about the liability for service tax on freight paid to transport life jackets for flood victims. One respondent stated that NGOs, classified as societies, are liable for service tax on Goods Transport Agency (GTA) services, but can claim a 75% abatement, reducing the effective tax rate to 2.575%. Another respondent agreed but argued that service tax should only apply to commercial transactions. Citing a notification exempting relief materials from rail transport tax, they suggested the same exemption should apply to road transport, potentially exempting the NGO from the tax.