Liability in case of GTA

[Guest]

Service Tax paid by GTA instead of the person liable to pay service tax i.e. Pvt.Ltd.Company. What is the consequences ? What is the remedy ?

[Madhukar N Hiregange]

Ideally pvt co to also pay the st and take credit for both. Circular issued on exact representation states that the GTA should not pay. Can we expect the GTA to understand and comply in the near term.

[RAKESH R]

As per the provisions of Section 68(2) of the Finance Act read with Service tax Rules, the liability of payment of service tax on GTA lies on the category of persons (service recipient) specififed in the Notification issued. Accordingly, Transport Agency is not liable to pay such service tax. The payment of tax by Transport Agency does not absolve the company from his liability to pay servie tax. The Department may say that the tax paid by the Agency is not a tax as he is not liable to pay as per Law and instead the Department demand tax from the company only irrespective of the payment by GTA. In order to overcome this issue, the company can authorise the GTA agency itself as his authorised agent to pay the tax on his behalf and get a confirmation letter from the agency along with proof for payment of tax (i.e. challan copy). The agency also to mention in his returns that the amount is paid on behalf of the company in the capacity of authorised agent. Though this suggestion is put into test, it is better advised to pay the tax by the company itself in future and to pay the agency only the freight amount. S. Gokarnesan Advocate

AI Summary

Who Pays Service Tax: Goods Transport Agency or the Company? Insights on Section 68(2) Finance Act. A discussion on a forum addresses the issue of service tax liability when paid by a Goods Transport Agency (GTA) instead of the liable private limited company. The first response suggests that the company should also pay the tax and claim credit, noting a circular advising against GTA payment. The second response clarifies that, under Section 68(2) of the Finance Act, the service recipient, not the GTA, is liable for the tax. It advises the company to authorize the GTA as its agent for tax payment or to directly pay the tax to avoid complications.