GOODS TRANSPORT AGENCY-SERVICE TAX IMPLICATIONS BY R.K RENGARAJ

R.K Rengaraj M.Com.,MBA., LL.B

Introduction:

Goods
Transport Agency (GTA)- Meaning
As per section 65(50B), ‘goods transport agency’ means any commercial
concern which provides service in relation to transport of goods by road and
issues consignment note, by whatever name called.Thus, essential requirement are –

(i)
Service must be in relation to transport of goods by road and
 (ii)
Service should be provided by ‘commercial concern’ and (iii) The service
provider must have issued consignment note by whatever name called.
If driver of
goods carriage is self employed or he himself is owner of vehicle, he is not a
‘commercial concern’ and hence would not come under that definition, even if he
issues a ‘consignment note’.
Consignment note –Meaning
As per explanation to rule 4B of Service Tax Rules, for purpose of rules 4A and
4B, “consignment note” means a document, issued by a goods transport agency
against the receipt of goods for the purpose of transport of goods by road in a
goods carriage. It should be serially numbered, and should contain following
details –1. Name of the consignor and consignee

2. Registration number of the goods carriage in which the goods are transported

3. Details of the goods transported

4. Details of the place of origin and destination

5. Person liable for paying service tax whether consignor, consignee or the
goods transport agency.

2013 (9) TMI 322 – CESTAT BANGALORE
The
case of the appellant is that the individual transporters who did not issue any
consignment note for transportation of the goods cannot be called “Goods
Transport Agencies” and therefore the appellant should not be held liable
to pay any amount of service tax under the head “GTA service” under
Section 65(105) (zzp) of the Finance Act 1994 read with Section 65 (50b) of the
Act.
Goods
Carriage-Meaning

As per section 65(50A) of the Finance Act, ‘Goods carriage’ has the meaning
assigned to it section 2(14) of the Motor Vehicles Act, 1988. As per section
2(14) of the Motor Vehicles Act, 1988, goods carriage means any motor vehicle
constructed or adapted for use solely for the carriage of goods or any motor vehicle
not so constructed or adapted when used for carriage of goods.As per section 2(28) of Motor Vehicles Act, 1988, Motor vehicle or vehicle
means any mechanically propelled vehi­cle adopted for use upon roads whether
the power of propulsion is transmitted thereto from external or internal source
and includes a chassis to which a body has not been attached and a trailer; but
does not include a vehicle running upon fixed rails or vehi­cle of a special
type adapted for use only in a factory or any other enclosed premises or a
vehicle having less than four wheels fitted with engine capacity of not
exceeding 25 (Twenty-five) cubic centimeters.

Rickshaw, taxi or tempo can come under
definition of ‘goods carriage’, if they carry goods. However, if such rickshaw,
tempo or taxi is owner driven or run by self employed person, it is not a
‘commercial concern’. It will be out of definition of ‘Goods Transport Agency’Whether services of Government or non-profit organizations would come under
service tax net?

Service of goods transport provided by Government, charitable institution or
any other non-profit organisation will not be taxable, as it is not a
‘commercial concern’.

A GTA can avail either of the 2 benefits given to him i.e. (a) He can enjoy
abatement of 75% on value of service & pay tax on only 25% of the value of
service (b) he can claim the benefit of Cenvat Credit on duties paid on inputs
& capital goods. In both the cases mentioned above, he is not barred from
taking credit for service tax paid by him on value of input services availed by
him for the purpose of rendering the taxable service.

Abatement:
Notn
No.26/2012 dt 20.06.2012- 75% abatement
 Sl No. 7. Services of goods transport agency
in relation to transportation of goods.
25
CENVAT credit on inputs, capital
goods and input services, used for providing the taxable service, has not
been taken under the provisions of the CENVAT Credit Rules, 2004.
Exemption:
a.
To Exporters: Notn No.31/2012 dt 20.06.12
Service provided to an
exporter for transport of the said goods by goods transport agency in a goods
carriage  from any container freight station or inland container
depot to the port or airport, as the case may be, from where the goods are
exported; or Service provided to an exporter in relation to transport of the
said goods by goods transport agency in a goods carriage  directly
from their place of removal, to an inland container depot, a container freight
station, a port or airport, as the case may be, from where the goods are
exported.
            b. To Others:
Notn No.25/2012 dt 20.06.12
 21. Services provided by a goods transport agency by way of
transportation of –
(a)   fruits,
vegetables, eggs, milk, food grains or pulses in a goods carriage;
(b)   goods where gross amount charged on a
consignment transported in a single goods carriage does not exceed one thousand
five hundred rupees; or
(c)   goods, where gross amount charged for
transportation of all such goods for a single consignee in the goods carriage
does not exceed rupees seven hundred fifty;
And also see Notn No.
3/2013 dt 01.03.2013 amended to include foodstuff, fertilizers etc.,
21. Services provided by a goods transport agency, by way of
transport in a
goods carriage of,-
(a) agricultural produce;
(b) goods, where gross amount charged for the transportation of
goods on a consignment transported in a single carriage does not exceed one
thousand five hundred rupees;
(c) goods, where gross amount charged for transportation of all
such goods for a single consignee does not exceed rupees seven hundred fifty;
(d) foodstuff including flours, tea, coffee, jaggery, sugar, milk
products, salt and edible oil, excluding alcoholic beverages;
(e) chemical fertilizer and oilcakes;
(f) newspaper or magazines registered with the Registrar of
Newspapers;
(g) relief materials meant for victims of natural or man-made
disasters, calamities, accidents or mishap; or
(h) defence or military equipments;”;
REVERSE
CHARGE MECHANISM: 30/2012 dt 20.06.2012
 Sl.No.
Description
of a service
Percentage
of  service tax payable by the person providing service
Percentage
of service tax payable by the person receiving the service
2
in
respect of  services  provided or agreed to be
provided  by a goods transport agency in respect
of transportation  of goods by road
Nil
100%
Person
liable for paying service tax : Notn No.36/2012 dt 20.06.12
(B) in relation to service provided or agreed to be
provided   by a goods transport agency in respect
of  transportation  of goods by road, where  the
person liable to pay freight is,—
  (I) any factory registered under or governed by the
Factories Act, 1948 (63 of 1948);
         (II) any society registered under
the Societies Registration Act, 1860 (21 of
        1860) or under any
other law for the time being in force in any part of India;
       (III) any co-operative society established
by or under any law;
       (IV) any dealer of excisable goods, who is
registered under the Central Excise
Act, 1944 (1 of 1944) or the rules made thereunder;
       (V) any body corporate
established, by or under any law; or
       (VI)  any partnership firm
whether registered or not under any law including association of persons; any
person who pays or is liable to pay freight either himself or through his agent
for the transportation of such goods by road in a goods carriage:
        Provided that when
such person is located in a non-taxable territory, the provider of such        service shall be liable to pay service
tax.
 “Provided that the place of provision of
services of transportation of goods by goods transportation agency shall be the
location of the person liable to pay tax.”
Sub-rule 2(1)(d) of
Service Tax Rules, 1994 provides that where a service of transportation of
goods is provided by a ‘goods transportation agency’, and the consignor or
consignee is covered under any of the specified categories prescribed therein ,
the person liable to tax is the person who pays, or is liable to pay freight
(either himself or through his agent) for the transportation of goods by road
in a goods carriage. If such person is located in non-taxable territory, then
the person liable to pay tax shall be the service provider.
 M/s AMRITA MOULDINGS PVT LTD
VERSUS COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD(
2013 (9)
TMI 33 – CESTAT NEW DELHI
).
Demand
of service tax on GTA service – both consignor as well as consignee are body
corporate – Held that – Consignor who would be liable to pay service tax and
the same cannot be demanded from the appellant – person liable to pay service
tax on the GTA service received would be the one who is liable to pay the
freight either himself through his agent
The author can be reached at: [email protected]

 

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