GTA applicability - Hiring of Dedicated vehicles for Local Movements.

[PAWAN KUMAR SHARMA]

We are availing the services from an individual for hiring of one Dedicated vehilce on daily basis and rate is also fixed for a day for 8 hrs. He does not prepare any consignment note on daily basis but have a log book which we sign as and when we receive his services.

He is not charging any taxes on his invoice. He also declares that his total taxable servics are below 10 lacs.

Kindly advice for the following :

1. Whether this comes under the preview of GTA ?

2. Suppose it is not under GTA, what taxes should be deducted from his payments ?

[abhi parakh]

Dear Mr. Sharma,

The scope of Service Tax applicablity on Goods Transport Agency (in short 'GTA') includes any service provided or to be provided by a GTA in relation to transport of goods by road in a goods carriage.

In the impugned case at hand the hiring of dedicated vehicle falls prima facie under the ambit of services provided  in relation to transport of goods by road hence classifiable as 'Transport of Goods by Road' Service u/s 65(105)(zzp) of the Finance Act 1994. First hand advice may be rendered on the following counts - 

(i)Exemption under notification no. 06/2005 - S.T. dated 01-03-2005 (as amended) - extends exemption of upto Rs. 10 lacs of services during the current FY subject to the condition inter alia, they have a turnover of taxable services of less than Rs. 8 lacs during the immediately preceeding FY  - hence in case your service provider had a turnover of taxable services of less than Rs. 8 lacs during the FY 2010-11 (say) he would not be liable to pay Service Tax on aggregate value of taxable services of Rs. 10 lacs during the FY 2011-12

(ii)Since being exempted from payment of service tax, he is also not liable to issue a consignment note.

 

Thereby specifying that the aforesaid genre of services would fall under the purview of GTA service, however same may be exempted on seeking exemption u/n no. 6/2005 (as amended).

Hope the aforesaid clarifies your query. In case of any further clarification kindly mail me at [email protected] or contact me on +91 9233423525.

Looking forward to an opportunity to serve you.  

With Best Regards,

CA Abhi Parakh

 

[YAGAY andSUN]

Dear Pawan,

If the goods transport agency does not issue a consignment note, there will be no service tax at all. In the case of such dedicated transporter, the transporter/the individual truck operators report to the compay or the factory on daily basis and carry the goods on the basis of the excise invoice or other invoice issued by the factory or the company as the case may be.  No individual consignment note is prepared.  The goods are vein to the transporter on trust.  The transport agency gets acknowledgement of the goods received by im on the copy of the invoice and hands the same over the notified category of persons.  Then based up the agreed per trip rate, the transporter prepares a statement of the trips made on a monthly basis and submits to the notified category or persons.  Since, there is no consignment note involved, the notified category of person is not liable to pay any service tax at all.

Further, it is reiterated that whenever, there is no consignment note involved, there is no service tax liability at all.   In such cases, it hardly matter, whether the freight is paid by a notified category of person or a non-notified category of person.

Best Regards,

Pradeep Khatri

[YAGAY andSUN]

Dear Pawan,

In continuation to our appended reply to your query, we further submit the following judgment for your kind information.  We hope that you will find it useful.

Transportation services rendered by individual truck owners and truck operators are not liable to service tax as 'GTA' service.

The CESTAT has held that transportation services provided by individual truck owners and lorry owners are not liable to service tax as a 'Goods Transport Agency' service.  K.M.B. Granites Pvt. Ltd. v CCE (2010) 19 STR 437 (Chennai) and Subramanyasiva Sugar Mills Ltd. v CCE [2010-TIOL-1061-CESTAT-MAD].

Thanks and Best Regards,

Pradeep Khatri

[NEERAJ KUMAR, RANCHI]

Dear Pawan,

I think You are taking services of a taxi/car and if I am correct , this service falls under the service category of rent-a cab-services. So this  does not come under the purview of GTA. If such service provider is below the threshold limit of Rs. 10 Lakh, he needs not to charge or pay service tax, so dont worry, in this case you have no liability.

But If you are taking services of Transport(Truck like) for carrying goods it is your responsibility to pay service tax , no matter if the transporter is above threshold exemption or not, yes it is his responsibility to show total service tax liability in his invoice however the same is required to be paid by you, hope answered your query.

[abhi parakh]

Dear Mr. Neeraj,

Wanted to make a mention....!

Under GTA services liability to pay service tax donnes upon the service receiver (i.e. person making payment of freight) only where the consignor or consignee of the goods transported is one of the following - [Notification No. 35/2004 - S.T. dated 03-12-2004]

(i)Factory Registered under or governed by the Factories Act;

(ii)Any company established by or under the Companies Act, 1956 (1 of 1956);

(iii)Any corporation established by or under any law;

(iv)Any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India;

(v)Any co-operative society established by or under any law;

(vi)Any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder; or

(vii)Any body corporate established, or a partnership firm registered, by or under any law;

In the aforesaid case since the consignor i.e. Mr. Pawan puportedly does not come under any of the aforesaid clauses, in cases wherein the consignee also (to be clarified by the querist) does not fall under the aforesaid clauses, the liablity of payment of service tax cannot beset upon the freight payer

With Best Regards,

CA Abhi Parakh

[NEERAJ KUMAR, RANCHI]

Dear Mr. Abhi,

In his question Mr Pawan Kumar Sharma has never mentioned about his status, seeing his concern about the applicability of service tax on the services provided by a service provider I could assume that he falls under one of the category as mentioned in Notification no. 35/2004 -ST and still on the basis of my experience I think that my assumption is correct. I request Mr sharma in this regard to confirm his status so that suitable reply can be advised.

Thanks.

[YAGAY andSUN]

I do agree with the reply of 'Neeraj Sir'.

[NEERAJ KUMAR, RANCHI]

Thanks Mr Khatri.

[PAWAN KUMAR SHARMA]

We are a company registered under Companies Act 1956 and have a unit/factory from where all payments are done.

AI Summary

GTA service applicability: hiring dedicated vehicles for goods may attract service tax where notified payers are involved. Hiring a dedicated vehicle for carriage of goods by road is prima facie classifiable as a Goods Transport Agency service; exemption notification may relieve taxable suppliers below the prescribed turnover threshold and exempt suppliers need not issue a consignment note. Liability to pay service tax may rest on the freight payer when the consignor or consignee falls within specified notified categories, while factual absence of consignment notes and characterisation of the supplier (e.g., individual truck owner or rent a cab) influences whether GTA treatment and tax liability apply.