CENVAT CREDIT ON GTA

[SANJEEV JADHAV]

Dear Sirs, My query is releating to availment of service tax credit on payment made by transporter. Please clarify whether we can avail cenvat credit of GTA paid by transporter. 

[rajkumar shukla]

CERTAINLY. BUT IS TRANSPORTER LIABLE TO PAY SERVICE TAX? PLEASE EXAMINE IN THE CONTEXT OF REVERSE CHARGE. IF YOU / SUPPLIER  ARE ONE OF THE SEVEN CATEGORIES AND FREIGHT IS PAID BY YOU, YOU ARE LIABLE TO PAY SERVICE TAX AND NOT THE TRANSPORTER. IN THIS CASE ALSO YOU CAN AVAIL THE CREDIT.BUT YOU NEED NOT PAY THE ELEMENT OF SERVICE TAX TO THE TRANSPORTER AS IT IS YOUR LIABILITY.

IN THE NUTSHELL, YOU CAN AVAIL THE CREDIT IF ACTUALLY THE TRANSPORTER IS LIABLE TO PAY SERVICE TAX.  OTHERWISE IT IS ADVISABLE TO NOT TO PAY THE TRANSPORTER.PAY YOUR SELF AND AVAIL THE CREDIT. DEPT MAY OBJECT AVAILMENT OF CREDIT WHERE TRANSPORTER IS ACTUALLY NOT LIABLE TO PAY SERVICE TAX.

[NEERAJ KUMAR, RANCHI]

I do agree with the above suggestion, only one thing I would like to add that pay your service tax liability by cash only and not through cenvat credit.

[YP SOOD]

Sh. raj kumar shukla has very well answered the query and Sh. Neeraj kumar has taken very good point. I agree.

[SANTOSH SHARMA]

Dear Sanjeev,

In terms of para 8 (b) of Master Circular No. 97 /8 /2007 dated 23^rd August, 2007,  the extract of which is appended below, you can avail Cenvat Crddit subject to meeting the requirements of Rule 3 of Cenvat Credit Rule, 2004.

ISSUE: Whether a consignee can take credit of the amount paid as service tax either by himself (as consignee) or by the consignor or by the Goods Transport Agency?

 

COMMENTS: As per Rule 3 of Cenvat Credit Rule, 2004, CENVAT Credit of, inter alia, service tax leviable and paid on any ‘input services’ can be taken. The rule does not distinguish as to who (i.e. the GTA, the consignor or the consignee himself) has paid the aforesaid tax. The only condition required to be satisfied is that the consignee must be a manufacturer of excisable goods or a provider of taxable service and the service must be in the nature of ‘input service’ for such activity. In case of inward transportation of inputs or capital goods, such service (being specifically mentioned under the definition of ‘input service’) would qualify to be called as ‘input service’ and, thus, the service tax paid (by any of the persons mentioned above) on it would be eligible as credit to the receiver if he is either a manufacturer of excisable goods or a provider of taxable service.

 

J. Mangalaraj.

Mumbai

[P Ovhal]

Dear Experts,

We are an Manufacturer-Exporter & pay ST by GAR7 Challan on GTA (Inward-Outward) Services.

As per Notification 13/2011-CE(NT) if we cant pay to tranporter within 3 Months can we need to reverce CENVAT Credit? 

Regards,

[ALOK GUPTA]

The liability to pay service tax often lies upon the person who pays transport charges. The seven categories, categorized to pay ST on GTA service, are enough to bind almot every business entity because it is seen that either consigner or consignee definately falls under one of those categories. Hence, it is necessary to confirm whether liablity to pay ST falls upon you or not. As regards availment of CENVAT Credit, it is availble.

ALOK GUPTA 

CENVAT CREDIT ON GTA

We are manufacturer and paying excise duty. We also availing GTA service for inward and outward transport and making service tax payment after abatement.

Kindly intimate us whether we will get input tax credit of the above service tax payment after 01.07.2012?

Regards

Dilip Choraria

K.C.Goyal (Advocate)

 

 

AI Summary

Cenvat credit on GTA: receiver may claim input service credit when the service qualifies and reverse charge applies.
Cenvat credit on GTA service tax is available to a manufacturer or provider of taxable service when the GTA service qualifies as an input service and the recipient meets Rule 3 conditions; who actually paid the tax (GTA, consignor or consignee) does not prevent credit. If the recipient falls within categories subject to reverse charge, the recipient must pay service tax and may claim credit. Compliance risks include departmental challenge where the transporter was not liable and potential reversal obligations tied to notifications regarding payment timing.