Service Tax on goods transport agency - certain doubts clarified - Service Tax - Press Release

SERVICE TAX ON GOODS TRANSPORT AGENCY PRESS RELEASE, Dated 28-12-2004 Government's attention has been drawn to news reports that a section of traders have threatened to go on a strike against the requirement of them having to pay service tax levied on goods transport agencies. In this regard the government wishes to clarify that apprehensions of the traders are misplaced. Primarily, the liability to pay the service tax is on the goods transport agencies. However, if the consignor or the consignee falls under one of the following seven categories, namely, i. factory registered under or governed by the Factories Act; or ii. company established by or un ler the Companies Act; or iii. corporation established by or under any law; or iv. society registered under Societies Registration Act or similar law; or v, co-operative society established by or under any law; or v. dealer of excisable goods, registered under the Central Excise Law; or vi. any body corporate established or a partnership firm registered by or under any law, the person making payment towards freight would be liable to pay the service tax!! Therefore, unless a trader falls under one of the above categories or makes payment of freight when transacting with any one of the seven categories, the trader would not be, liable to pay the service tax. Thus, a trader sending goods to another trader or any entity outside the above seven categories would not be liable to pay service tax, even if the freight is paid by him. The present dispensation is similar to the method of collection of service tax prescribed in 1997 on goods transport operators Even in the rare case where a trader is required to pay service tax, full exemption is available when the gross amount charged on all consignments transported in a goods carriage is not more than Rs,, 1500 or on an individual consignment is not more than Rs.750 Further, no service tax is chargeable on transportation of fruits, vegetables, eggs or milk irrespective of the amount of freight charges. It has also been clarified that for the time being, no penalty would be imposed on bona fide omissions in payment of service tax or procedural lapses by tax payers. Thus, the government has taken steps to ensure that traders are generally kept out of the service tax net.