Sunday, August 12, 2012

GOODS TRANSPORT AGENCY SERVICE CHANGES AFTER 01.07.2012


on Sunday, August 12, 2012

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
No
By air within the country or abroad
No
By a vessel in the coastal waters
No
By a vessel on a national waterway
Yes
Services provided by a GTA
No



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 .

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.

44 comments: Post Yours! Read Comment Policy ▼
PLEASE NOTE:
We have Zero Tolerance to Spam. Chessy Comments and Comments with Links will be deleted immediately upon our review.

  1. This comment has been removed by the author.

    ReplyDelete
  2. Everthing is very clearly explained.

    Thanks,

    CA Bajaj

    ReplyDelete
  3. We are pvt ltd co engaged in manufacture of excisable goods and availing cenvat credit on inputs. We used to pay service Tax on 25 % of the freight amounts paid as Service receiver . What is status Under the revised service tax law effective 1.7.2012. Can we still avail the 75 % abatement. We used to claim credit of the service Tax paid on incoming freight. Can we continue availing the same.

    ReplyDelete
    Replies
    1. yes you can still avail 75% abatement and can add tax paid on 25 % payment amount in cenvat credit.

      Delete
  4. Dear Sir
    If we are consignee & we are reimbursing the Freight Amount To The Consignor according to the clause of Purchase order Then are we liable to pay the service tax that amount also??please explian.

    ReplyDelete
    Replies
    1. No need to pay service tax again under reverse charge to service tax department .However supplier may demand reimbursement of Service tax paid by him ,under reverse charge .

      Delete
    2. Dear Sir,

      We are Pvt. Ltd. company. We engaged GTA for transportation of goods by road. If we pay freight to broker & broker pay freight to transporter in this case who will pay the service tax.

      Delete
  5. Sir,
    I have same question as per parag vohra. Please give me the link of notification which describe 75% abatement on freight charges. Sir please suggest me what is the amount eligible for paid serice tax. We took Rs. 750 minimum for service tax calculation. Is it right or not.

    ReplyDelete
    Replies
    1. 75% abatement is available as per notification 26/2012 dated 20.06.2012 applicable wef 01.07.2012

      http://www.simpletaxindia.net/2012/06/abatement-rate-in-services-tax-amended.html

      Further read exemption notification 25/2012 sr number 21 for minimum amount.
      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.

      Delete
  6. Dear Sir,

    We are a private limited transporter and issue our first L.R. to sender M/s. XYZ for Rs. 25000/-, pls let me know our service tax liability.

    ReplyDelete
    Replies
    1. In most of the cases you have no service tax liability. if

      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;

      You are not liable to pay service tax . In other cases you are liable . You may avail 75% abatement from gross value

      Delete
  7. Can i take CENVAT CREDIT benefit after making payment of 100% service tax instead of taking of 75% abtement benefit in case of transportion frieght.

    ReplyDelete
  8. Sir, if a manufacturing concern engage GTA(Goods transport agency) in its own factory premises to deliver its raw material from one division to another division in the same factory premises and the GTA charge a bill on which it charges S.T will it be eligible as input credit under the same abatement.

    ReplyDelete
    Replies
    1. Transportation facility becomes GTA only if they are issuing consignment note . I doubt in internal factory transfer consignment notes are being issued . so it is a simple hiring of vehicle,

      Any How in any case , in our opinion ,you can claim cenvat credit

      Delete
  9. we are registered under GTA.our Basic sale value is including freight charges and we are paying 12.36% excise duty on that basic value.
    kindly let us know weather we are liable pay service tax or not

    ReplyDelete
  10. SIR
    WE ARE A FACTORY REGISTERED UNDER FACTORY ACT AND ARE ENGAGING A INDIVIDUAL WHO IS THE OWNER OF THE TEMPO FOR DELIVERING MATERIAL MANUFACTURED BY US, FOR DELIVERING THE SAME TO OUR CLIENT LOCALLY.
    AS OUR CLIENT IS BASED IN BARODA WE ARE PAYING HIM RS 450 FOR EACH TRIP.
    ARE WE LIABLE TO PAY SERVICE TAX ON THE , ABOVE AS PER LATEST SERVICE TAX RULE.
    PLEASE HELP

    ReplyDelete
  11. Dear Sir,

    We are a Pvt. Ltd. Company. We engaged GTA for Transportation of goods by road. If we pay freight for the same to our broker & broker pay the said freight to GTA in this case who will pay the service tax to deptt.

    ReplyDelete
  12. Respected Sir,
    I GTA provides service to non specified person i.e Proprietorship Firm, GTA has to pay service tax.
    But my question is Can GTA charge service tax in his invoive to Proprietorship Firm?

    Hoping for quick reply
    Thanks

    ReplyDelete
    Replies
    1. yES ,Gta can charge service tax to prop. also.

      Delete
    2. yES ,Gta can charge service tax to prop. also.

      Delete
    3. Sir we are in to construction company, can we avail abatement of 75% on payment of service tax on transport charges

      Delete
  13. Sir, i want to know that about Service tax liability if consignee is proprietorship concern and he is not paid service tax on GTA due to he has not pay freight 10 lakh in P.A., so now under reverse charge mechanism he is eligible to pay service tax and obtain service tax number for payment of service tax. pls reply

    ReplyDelete
  14. Dear sir,
    Consignor pays freight to Goods Transport Agency, but consignor recovers the same from consignee when bill for good submitted where he(Consignee) specifically mention as 'Freight Charges', So who is liable to pay service tax under reverse charge mechanism, consignor or consignee??? Consignor and consignee both are specified person.

    Plz reply.

    ReplyDelete
  15. Sir,
    i wanna know about the legal formalities to be fulfilled when we transport goods from one state to another state for trade.. goods are cereals and vegetables.. is there any tax to be paid for it. Any special papers are needed for it during the transit.. can you pls help.

    ReplyDelete
  16. Sir, Please explain,

    Individual who arranges transport vehicles (truck) by paying them consideration on tonnage per km basis and transport bauxite to specified destination. Consignee is an individual who receives royalty from Govt. for bauxite mining and cosigner is another transporter.

    Applicability of service tax????

    ReplyDelete
  17. Dear Sir

    I have owner of Goods Transport Agency, we have contract with govt for supplying goods from Factory to Rationing Shop, they fix our rate for Per ton, we raise invoice to them.

    i want to know applicability of Service Tax

    ReplyDelete
  18. If the person liable to pay freight is a n Individual/Proprietor then whether he shall pay service tax on reverse charge basis or not?

    ReplyDelete
  19. I HAVE A PVT. LTD. COMPANY. WE TRANSPORT GOODS TO OUR OTHER DEPOT FROM ONE STATE TO ANOTHER THROUGH A GOODS TRANSPORT AGENCY AND HE ISSUES ME A CONSIGNMENT NOTE ALSO. I AM NOT REGISTERED WITH SERVICE TAX EITHER. PLEASE GUIDE ME THE LEGAL FORMALITIES TO BE DONE AND IF I AM TO PAY THE SERVICE TAX FOR THE GOODS TRANSPORTED

    ReplyDelete
    Replies
    1. Yes being a company you have to pay the service tax. Get youself registered with the department and pay tax on 25% value of the freight/transportation charges.

      Delete
  20. i have a doubt whether the service tax applicable to the service receiver on the basis of good transport agency if the service receiver's carriage amount not exceed Rs 9,00,000 and the service receiver is already registered under service tax and paying service tax for past 3 years. the excise duty is also applicable to the firm

    ReplyDelete
    Replies
    1. general exemption is not available under reverse charge ,service receiver is liable to pay service tax under GTA even he has received services less than 900000.

      In brief what ever the amount be ,no exemption available on amount basis .

      Delete
  21. Dear Sir,
    If ABC (P) Ltd. is a manufacturing concern and has own vehicles for transportation of goods to the dealers. Now if the invoice for goods is on FOR basis without any segregation of transport charges then whether the Co. is liable to pay service tax on any lumpsum value? Moreover what will be the implication if transport charge is charged extra on invoice value?

    ReplyDelete
    Replies
    1. In both cases ,service tax is not applicable as good transported by road other than by Goods transport agency or courier company is covered under negative list under service tax.

      Further VAT may be applicable on whole of amount ,if segregation of freight amount is not shown (check your state Vat Act)

      Delete
  22. Thanks a lot Sir,
    More query:
    1) If ABC Transport Co., a GTA having Service Tax Registration usually adds the service tax amount in the bill, some of the consignors though falling under 7 categories but still pay the service tax to ABC Transport Co., while some others pay directly to the S. Tax Deptt. Now Sir, whether Deptt. can ask the transporter that since it has charged S. Tax in its bill, so it has to pay S. tax on the entire amount of Service provided?

    2) If XYZ (P) ltd., a consignee who pays the freight pays freight as well as the Service Tax to the transporter, now whether XYZ (P) Ltd. Now whether XYZ (P) Ltd. has done any default as per Service Tax Law?

    ReplyDelete
    Replies
    1. ABC ltd should not add service tax in bill ,as in most of the case consignee/consignor falls under specified categories. Generally department is not issuing demand from GTA with above facts.

      2) specified Consignor/consignee should not pay service tax to GTA and should pay the same as under reverse charge to avoid problems from department

      However in both case as there is no loss to revenue ,assessee can take pleas on the basis of this fact

      Delete
  23. Dear Sir, I have a proprietorship firm in the manufacturing activity but not registered under Factory Act. My question is whether I have to pay service tax on the freight/transportation paid by our firm. As I do not fall in any of the specified category of persons list. My doubt is category (a) says "any factory registered or governed by the Factories Act", therefore, do our firm fall under this category due to manufacturing activities, though we are not registered under Factory Act.

    Your early response is appreciated.

    ReplyDelete
  24. Sir., if a GTA arrange vehicles for an agent (proprietory frim) who in turn offers services to bonafide exporters for export goods removal shud the GTA collect service tax from the agent ( though agent cant collect same from exporters) ??? pls reply what will be the situation for the GTA after 2012 and before 2012 ??? Kindly reply

    ReplyDelete
  25. Sir., if a GTA arrange vehicles for an agent (proprietory frim) who in turn offers services to bonafide exporters for export goods removal shud the GTA collect service tax from the agent ( though agent cant collect same from exporters) ??? pls reply what will be the situation for the GTA after 2012 and before 2012 ??? Kindly reply

    ReplyDelete
  26. imdt reply highly appreciated
    ringo

    ReplyDelete
  27. WEATHER SERVICE RECEIVER CAN AVAIL CENVAT CREDIT IF IT AVAILS ABATEMENT AND PAY TAX ON 25% OF THE VALUE OF THE GOODS

    ReplyDelete
  28. weather service receiver can take Cenvat Credit if he pays service tax at the abated rate of 25% of the value of services under Reverse Charge in case of Goods Transport Agency Services ?

    ReplyDelete