Definitions :
"goods transport agency" means  any  person  who  provides  service  in  relation  to transport  of  goods  by  road   and  issues  consignment  note,  by whatever name called

“goods carriage” has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);

"goods carriage“[Section 2(14)] 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 the carriage of goods;

Negative List  Service relating to transportation of goods

The following services provided in relation to transportation of goods are specified in the negative list of services:-
  1. by road except the services of 
    •  (i) a goods transportation agency; or
    •  (ii) a courier agency
  2. by aircraft or vessel from a place outside India up to the customs station of clearance in India; or
  3. by inland waterways.
So from point number 1(ii) it can be concluded that all road transport where goods transport agency is not involved ,then services are covered under Negative List.

Example of transportation of goods comes under negative list: 

1. A truck owner transporting goods directly without involvement of Goods of Goods transport agency.
2. A manufacturer Transporting goods to there dealer through their own transportation.
3. Transportation on bullock cart, tonga, rickshaw, thela etc – no tax
4.  Farmers transporting goods of fellow farmers after harvest from farms to sugar mills

Are service by way of giving on hire a means of transport to goods transport agency also covered under negative list?

As per serial number 22 service by way of giving on hire to goods transport agency a means of transport of goods is exempted.

Services by way of giving on hire 

(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or
(b) to a goods transport agency, a means of transportation of goods; 

The benefit in relation to vehicles provided to goods transport agency is presently available in terms of Notification No. 1/2009‐S.T., dated 5.1.2009.

Means of Transport has been defined in Place of provision of service tax rules ,2012.

“means of transport” means any conveyance designed to transport goods or persons from one place to another;
Are all services provided by goods transport agency excluded from the negative list?

Yes. However, there are separate exemptions available to the services(sr no 21 of negative list) provided by the goods transport agency. These are services by way of transportation of –

  1. fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;
  2. goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or
  3. 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.
This benefit is presently available in terms of Notification No. 33/2004‐S.T. and Notification No. 34/2004‐S.T., both dated 03.12.2004 and the same has been continued into the proposed negative list regime.

Are goods transport agencies liable to pay tax in all cases or are provisions relating to reverse charge also applicable after introduction of negative list?

The provisions relating to reverse charge, i.e. service tax is liable to be paid by the consigner or consignee in specified cases, are applicable even after the introduction of negative list.(Notification on reverse charge 30/2012 dated 20.06.2012)

List of specified Person covered under reverse charge for goods transport agency services is given as under.

Generally, service provider is responsible for payment of Service Tax.However, in case of Goods Transport Agency service the liability of paying Service Tax may fall on service receiver or service provider depending on the status of the receiver, as per Service Tax Rules 1994, taxable service is provided by a goods transport agency  to specified category of persons then service tax is liable to be paid by the consigner or consignee . 

where the consignor or the consignee is,—

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(b) 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;

(c) any co-operative society established by or under any law;

(d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons;

Some transporters under-take door-to-door transportation of goods or articles and they have made special arrangements for speedy transportation and timely delivery of such goods or articles. Such services are known as ‘Express Cargo Service’ with assurance of timely delivery. Whether such ‘Express cargo service’ is excluded as courier agency service under this negative list entry?

“Courier” has been defined in section 65B as any person engaged in door-to-door delivery of time sensitive documents, goods or articles utilizing the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles. The nature of service provided by ‘Express Cargo Service’ falls within the scope and definition of the courier agency. 

Hence, the said service is excluded from the negative list entry relating to transportation of goods by road.

Whether services provided by ‘angadia’ are liable to service tax as a courier service?

‘Angadia’ undertakes delivery of documents, goods or articles received from a customer to another person for a consideration. Therefore, ‘angadias’ are covered within the definition of a ‘courier’ and services provided by angadia are liable to service tax.

Are the following services of transportation of goods covered in the negative list entry?

Nature of service relating to transportation of goods
Whether covered in the negative list entry?
By railways
By air within the country or abroad
By a vessel in the coastal waters
By a vessel on a national waterway
Services provided by a GTA

Are services provided as agents for inland waterways covered by this entry?

No. these are in the nature of services used for providing the negative list entry service of  transport of goods on inland waterways and would not be covered by application of the rule for interpretation where services are specified by way of description contained in clause (1) of section 66F of the Act. (for guidance on this rule please refer to Guidance Note 9) 

What is the place of provision of a service of transportation of goods?

Place of provision of goods transportation services.- The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods: 

Provided that the place of provision of services of goods transportation agency shall be the location of the person liable to pay tax.

Place of provision of a service of transportation of goods is the place of destination of goods,except in the case of services provided by a Goods Transportation Agency in respect of transportation of goods by road, in which case the place of provision is the location of the person liable to pay tax (as determined in terms of rule 2(1)(d) of Service Tax Rules, 1994 (since amended).

What are the services covered under this Rule?

Any service of transportation of goods, by any mode of transport (air, vessel, rail or by a goods transportation agency), is covered here. However, transportation of goods by courier or mail is not covered here.

What does the proviso to this Rule imply?

The proviso to this Rule states as under:-

“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.

Illustration 1

A goods transportation agency ABC located in Delhi transports a consignment of new motorcycles from the factory of XYZ in Gurgaon (Haryana), to the premises of a dealer in Bhopal, Madhya Pradesh. Say, XYZ is a registered assessee and is also the person liable to pay freight and hence person liable to pay tax, in this case. 

Here, the place of provision of the service of transportation of goods will be the location of XYZ i.e. Haryana.

Illustration 2

A goods transportation agency ABC located in Delhi transports a consignment of new motorcycles from the factory of XYZ in Gurgaon (Haryana), to the premises of a dealer in Jammu (non-taxable territory). Say, as per mutually agreed terms between ABC and XYZ, the dealer in Jammu is the person liable to pay freight.

Here, in terms of amended provisions of rule 2(1)(d), since the person liable to pay freight is located in non-taxable territory, the person liable to pay tax will be ABC. Accordingly, the place of provision of the service of transportation of goods will be the location of ABC i.e. Delhi.

Abatement Rate in Goods Transport agency Services 

All abatements available to services of specified categories have now been merged in one exemption notification no 26/2012-ST dated 20/6/12. In terms of the said notification, exemption is granted from so much of the service tax leviable, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified.

In Services of goods transport agency 75 % abatement is allowed and only 25 % services of gross amount is chargeable to service tax .

In Services of goods transport agency 70 % abatement is allowed and only 30% services of gross amount is chargeable to service tax  wef 01.04.2015

However with a condition that CENVAT credit on inputs, capital goods and in relation to transportation of goods. input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

Changes in Goods transport agency services after 01.07.2012 from old provisions has been tabulated is given  below. 

S. No.Amendment with their implications
1.Change in the person specified as “person liable to pay service tax”, in the rule:

EarlierReverse charge was applicable,where the consignor or consignee of goods falls under specified category.Earlier if the consignor or consignee falls under the specified category and the freight is paid by individual then it is the individual who is required to pay service tax under reverse charge.

This hardship is now removed as reverse charge is applicable only when the person liable to pay freight falls under specified category.
w.e.f. 1/07/2012Reverse charge is applicable,where the person who is liable to pay freight falls under specified category.
2.Change in the “specified category”, as given in the said sub-rule:

EarlierAny partnership firm registered, by or under any lawW.e.f. 01.07.2012 provision of reverse charge is applicable even if person liable to pay freight is unregistered partnership firm.

w.e.f. 1/07/2012Any partnership firm whether registered or not under any law including association of persons.
3.Inclusion of a new proviso to the said rule:

W.e.f. 1/07/2012Provided that when such person is located in a non-taxable territory, the provider of such service shall be liable to pay service tax.The implications are explained with the help of an example as given in illustration 2.


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