Liability in case of GTA

[Asked by 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

Service tax liability on service recipient: payment by carrier does not relieve recipient, authorise agent or pay directly.
Liability for service tax on goods transport rests on the service recipient; a GTA's payment does not relieve that recipient of statutory liability and the revenue can still demand tax from the recipient. Recommended compliance: the recipient should pay and claim credit, or expressly authorise the GTA as its authorised agent with written authorisation and challan evidence and ensure the GTA records the payment in its returns; best practice is for the recipient to pay directly and pay the GTA only freight.