GOODS TRANSPORT AGENCY -SERVICE TAX IMPLICATIONS

[KAMARAJ RENGARAJ]

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.

Case laws:

M/s PARRY SUGARS INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX VISAKHAPATNAM [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.

M/s Carris Pipes & Tubes Pvt. Ltd. Versus Commissioner of Central Excise, Coimbatore [2013 (8) TMI 294 - CESTAT CHENNAI]

Revenue was of the view that assessee should have paid service tax in terms of Rule 2 (1) (d) (v) of Service Tax Rules, 1994 wherein the service tax is to be paid by person paying freight - Held that - Service tax levy shall not be applicable to individual truck owners as such no consignment note was issued in any manner.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’ for the purpose of levying service tax.

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’ for the purpose of levy. 

A GTA can avail either of the two 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:

Notification 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:

1. a.     To Exporters: Notifiction 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: Notification 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 Notification 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 : Notification 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.

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Discussions to this article

[Neha Gupta]

If the GTA, providing transportation facility to a body corporate, but does not issue consignment note to such body corporate, then who is liable to pay service tax?

 

[KAMARAJ RENGARAJ]

I have referred a case law 2013 (9) TMI 322 CESTAT, Bangalore in third para which is similar to your query.  The Tribunal held that there is no liability for the company.