Liability of service tax on freight

[Sarwan Agarwal]

Applicability of notification no. 34/2004, Our client is an excvisable unit. He sends goods in full Truck Load to his customer and pays Rs. 1400/- towards freight. The Transporter is not regd. under Service tax. whether our client is liable to pay service Tax on the Freight or the exemption is applicable in his case as the gross value of consignment is below Rs. 1500/-. Plz clarify?

[Surender Gupta]

Yes, in case consignor or consignee are falling under any one category of the list of persons specifed.

[Sarwan Agarwal]

Dear Surendraji Why exemption notifiaction no. 34/2004 is not applicable, even if my client is specified catagory of person?. Since per Full Truck load amount paid is below Rs. 1500/-, in my opinion he is exempt from payment of Service Tax. Kindly elaborate on the issue? Regds

Exemption under Notn 34/2004 is available even when the tax is to be paid by consignor/consignee as per the provisions. Hence, if the gross amount charged on consignments transported does not exceed Rs.1500/-, there would be no Service tax liability on you.

AI Summary

Service tax exemption on freight applies where consignment value falls below threshold, excluding tax liability for consignor or consignee.
The exemption under Notification 34/2004 applies to freight for consignments where the gross amount charged per consignment does not exceed the statutory threshold; this exemption operates even when liability to pay tax is cast on the consignor or consignee, so freight paid for full-truck-load consignments below that threshold is not subject to service tax despite the transporter's non-registration.