SERVICE TAX ON GOODS TRANSPORT AGENCY

Topic for the day Legislative History. GTO Service GTA Service Person liable to pay ST Exemptions & Conditions. CENVAT & GTA Services. GTA –SCNs issued.

Legislative History Budget ST on GTO was imposed (16/11/1997) Budget ST on GTO was exempted (49/98 dt 02/06/1998) & Omitted from 16/10/1998. –(Laghu Udyog Bharati v. Union of India 1998 (112) ELT 365 (SC)) Budget Retrospect amendment. Budget 2003 – Amendment – Section 71A – (Gujarat Ambuja Cements Ltd.v.UOI.(SC) –CCE, Meerut-II vs. L.H. Sugar factories ltd [2005] 2 STT 282 (SC) Budget 2004 – ST on GTA. (Wef )

Budget 2004 – ST on GTA. In Budget 2004, the Service Tax was levied on Goods Transport Service. Government Appointed a Committee under the Chairmanship of Shri S.K. Bhardwaj, Member, CBEC having member from All India Motor Transport Congress. Based on the recommendation of the Committee the levy was made effective from 01/01/2005.

Goods Transport Agency Definition: –“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; [ With effect from 01/05/2006 “Commercial concern” was changed as “any person”] –“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 “Gods carriage” has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988) (14) "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 the carriage of goods;

Taxable service To a customer, by a goods transport agency, in relation to transport of goods by road in a goods carriage

Person liable to pay Service Tax in relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is,— (a)any factory registered under or governed by the Factories Act, 1948 (63 of 1948); (b)any company formed or registered under] the Companies Act, 1956 (1 of 1956); (c)any corporation established by or under any law; (d)any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India;

Person liable to pay Service Tax (e)any co-operative society established by or under any law; (f)any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made there under; or (g)any body corporate established, or a partnership firm registered, by or under any law, 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;] In all other cases which do not belong to the specified cases (like where the service recipient is an individual or HUF or an unregistered partnership firm but being service receiver pays the freight), the goods transport agency providing the service is liable to discharge the statutory liability towards service tax.

Person to follow prescribed procedure for Service tax As per Section 65 of Finance Act 1994, Assessee" means a person liable to pay the service tax and includes his agent; Further Rule 2 (d) of Service Tax Rules defines "Person liable for paying service tax" and in the case of Goods Transport Agency it has specified category of persons. In view of the legal provisions the Specified Category of persons has to follow the prescribed procedure such as Registration, Payment of Service Tax and filing of return.

Exemptions 32/2004 Dt. 03/12/ Abatement 75%. [As amended by 1/2006 ST Dt. 01/01/2006] 33/2004 Dt. 03/12/2004 –Exempts transport of Fruits, Vegetables, Eggs or Milk 34/2004 Dt.03/12/2004- Exemption [ The gross amount charged on consignments transported in a goods carriage does not exceed rupees one thousand five hundred; or the gross amount charged on an individual consignment transported in a goods carriage does not exceed rupees seven hundred fifty.]

Notification No 32/2004 Vs Notification No. 1/2006 Exempts the taxable service provided by a goods transport agency to a customer, in relation to transport of goods by road in a goods carriage. [32/2004 dt 03/12/2004] Exempts the taxable service of the description specified in column (3) of the Table below and specified in the relevant sub-clauses of clause (105) of section 65 of the Finance Act, specified in the corresponding entry in column (2) of the said Table, from so much of the service tax leviable thereon under section 66 of the said Finance Act.[1/2006 Dt 01/03/2006]

Budget 2008 Vide Notification no. 13/2008-ST, Dated the following conditions have been omitted for the availment of abatement. i.Non availment of the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services. ii.Non availment of the benefit under the notification No. 12/2003-Service Tax, dated the 20th June,

Budget 2008 In the budget of 2008, service provided in relation to supply of tangible goods for use, without transfer of possession and effective control, has been made as separate taxable service and this service has come into force with effect from May 16, Consequently, supply of goods carriage to the GTA, without transfer of possession and effective control for using the said goods carriage for transport of goods by road becomes taxable under service tax but Notification No. 29/2008-ST, dated June 26, 2008 exempts fully the levy of service tax on supply of goods carriage to GTA for use in transportation of goods by road. [The effect is that “ LORRY/TEMPO hired are Taxable. But such vehicles when supplied to GTA for transportation is exempted]

GTA –ISSUES Issues: 1.Can personal liable to pay service tax on GTA get centralized Registration ? 2.Can CENVAT credit allowed on Service Tax paid on GTA Service ? 3.Can Service Tax payable on GTA can be paid through CENVAT Credit Account? 4.Can CENVAT Credit on GTA availed on outward transport? 5.What is the document based on which credit could be taken?

Can personal liable to pay service tax on GTA get centralized Registration ? Yes. From , Sub Rule 2 and 3 of Rule 4 of Service Tax Rules,1994 was amended such that “ A person, liable for paying service tax on a taxable service,(i) provides such service from more than one premises or offices; or (ii) receives such service in more than one premises or offices; or (iii)is having more than one premises or offices, which are engaged in relation to such service in any other manner, making such person liable for paying service tax, and has centralised billing system or centralised accounting system in respect of such service may, at his option, register such premises or offices from where centralised billing or centralised accounting systems are located.”

Can credit of on Service Tax paid on GTA Service is allowable? Yes. Credit of Service tax on GTA is allowed and this can be utilised for the payment of Output /Output Service.

Can Service Tax payable on GTA can be paid through CENVAT Credit Account? No. As per the provisions of Cenvat Credit Rules GTA service is not considered as “Output Service” [Refer: clause (p) of rule 2 of the CENVAT Credit Rules 2004]

Can Credit on Service tax paid GTA on outward transport is allowable ? From 10/09/2004 to 31/03/2008- The issue is pending before Judicial Forum. From 01/04/2008- Clause l of Rule 2 of Cenvat Credit Rules, 2004 has been amended such that the term “clearance of final products from the place of removal” is substituted with the term clearance of final products, upto the place of removal],

What is the document based on which credit could be taken? As per the provisions of Rule 9 of Cenvat Credit Rules 2004 a challan evidencing payment of service tax by the person liable to pay service tax under clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994 is recognized as a valid document to avail credit of Service tax paid on GTA.

Document based on Service tax on GTA to be paid. As per the provisions rule 4B of Service Tax Rules 1994, A goods transport agency which provides service in relation to transport of goods by road in a goods carriage has to issue a consignment note to the recipient of service and should and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency.

Calculation ST on GTA-1 Transport charge = Rs.100/- Abatement =Rs. 75/- Taxable Value=Rs. 25/- ST Payable = Rs. 25 X 12% Edu.Cess = ST x 2% SHE Cess = ST x 1%

Calculation ST on GTA-2 Transport charge = Rs.100/- ST Payable = Rs. 100 X 3% Edu.Cess = ST x 2% SHE Cess = ST x 1%

Important Circulars MINISTRY’S CIRCULAR F. NO. 341/18/2004-TRU(PT.), DATED LETTER F.NO. 345/4/2005-TRU, DATED [Goods Transport Operator - CENVAT credit] ORDER 37B ORDER NO. 5/1/2007-ST, DATED CIRCULAR NO.95/6/2007-ST, DATED [Difficulties being encountered by Goods Transport Agencies in Issue of consignment note ] CIRCULAR F. NO. 232/2/2006-EX.4, DATED [Levy of service tax on transportation activities undertaken in mines prior to ] CIRCULAR/LETTER D.O.F. NO. 334/1/2008-TRU, DATED [75 per cent abatement continued from without any conditions] CIRCULAR NO. 104/07/2008-ST, DATED [Service tax levy on goods transport by road services - meetings held with AIMTC]

Thank you B.Venkateswaran, Supdt of Central Excise, Coimbatore III B Range