Service Tax on goods transport operator - Service Tax - 87/97

Attention of the trade is invited to this office Trade Notice Nos. 32 33 C.E. (Service Tax)/97, dated November 10, 1997 through which it has been informed about the imposition of service tax on the services rendered by Goods Transport Operators w.e.f. 16 th November, 1997 in terms of Notification Nos. 41/97 to 43/97-S.T., dated 5-11-1997 - Govt. of India, Ministry of Finance, Department of Revenue. 2. It is felt that some clarifications in respect of the service given below for guidance of public/trade would be beneficial. 3. Transporters are informed that goods transport operator has been defined as any commercial concern engaged in the transportation of goods but does not include a courier agency . Taxable service in this context means any service provided to a customer, by a goods transport operator in relation to carriage of goods by road in a goods carriage. 4. It has been decided that service tax will be payable by the following categories of persons only, namely :- (i) any factory registered under or governed by the Factories Act, 1948; (ii) any company established by or under the Companies Act, 1956 ; (iii) any corporation established by or under any law; (iv) any society registered under the Societies Registration Act, 1860 or under any law corresponding to that act in force in any part of India; (v) any co-operative society established by or under any law; (vi) any dealer of excisable goods who is registered under the Central Excise Act, 1944 or the rules made thereunder; (vii) any body corporate established by or under any law; and (viii) any person who is registered with any Sales Tax authority and whose turnover had exceeded ₹ 50 lakhs in the preceding financial year. 4.1 For this purpose in the Service Tax Rules have been amended accordingly to prescribe that the responsibility for payment of service tax shall also lie with the above categories of persons. Further, they will be liable to pay service tax on the gross amount charged including the freight but excluding the insurance charge by the transporter from them for transporting the goods by road in a goods carriage. The service tax will be payable when such cost of transportation is borne by the above mentioned categories of persons either as a consignor or as a consignee and when such charges are borne by them directly or indirectly. 4.2 If a person falls under two overlapping categories mentioned above then the service tax will not be payable twice but only once under any one appropriate category. For example, a factory may also be registered with the sales tax authority under category (viii) above. It would suffice if the service tax in this case is paid as a factory [category (i) above]. 4.3 Such persons will be liable to pay above service tax even when they engage agents, including clearing and forwarding agents or consignment agents to undertake distribution/transportation of goods on their behalf, any such persons shall also attract the levy of service tax, irrespective of the fact that the freight is paid directly by such persons or indirectly by their such agents. In other words, the categories of persons mentioned in para 2 are liable to pay service tax whenever they bear the freight charges, either as a consignor or consignee. The details of the freight expenses borne by them will be available in the books of accounts maintained by them. 5. Notification No. 42/97-S.T . provides that the `person responsible for collecting the service tax in relation to services provided by a goods transport operator shall be the person who pays or is liable to pay the freight either himself or through his agent for the transportation of goods by road in a goods carriage. 5.1 Notification No. 43/97-S.T. exempts the taxable service provided by a goods transport operator from the levy of service tax on taxable service rendered by such operator to a customer in relation to carriage of goods by road, where the freight for such carriage is paid or is liable to be paid by any person or his agent, other than the above mentioned category of persons. 6. General 6.1 As per Section 69 of the Finance Act, 1994 , read with Rules 3 and 4 of the Service Tax Rules, 1994 , every person responsible for collecting the service tax is required to be registered with the concerned Central Excise Officer appointed under Rule 3. Notification No. 42/97-Service Tax, dated 5-11-1997 amends Rule 2 of the said rules so as to prescribe that the person responsible for collecting the service tax in relation to the services provided by a goods transport operator shall be every person who pays or is liable to pay the freight either by himself or through his agent for the transporation of goods by road in a goods carriage. 6.2 Rules relating to service tax on other service have already been notified and the trade is advised to go through them. However, for the benefit of the services which are to be covered by the Notifications No. 41/97 to 43/97-S.T., dated 5-11-1997 , the procedures to be followed for registration, maintenance of documents, filing of returns and the manner in which the service tax is to be paid and which are contained in Chapter V of the Finance Act, 1994, notified to the trade vide this Commissionerate Trade Notice No. 46/CE (Misc. 46)/94, dated 7-7-1994 are reproduced along with annexures as amended from time to time and by the Finance Act, 1997. Registration 6.3 The assessees will apply for registration in Form ST-1 (Annexure-I) (Annexure not printed). An acknowledgement will be provided on the duplicate copy of the ST-1 form by the Superintendent of Central Excise (Service Tax). Registration No. will be allotted on receipt of their application. Payment of Service Tax 6.4 Rule 6 of the Service Tax Rules, 1994 , deals with the payment of service tax. The service tax will be deposited under Head 0044, in Form TR 6 in yellow colour as amended vide Service Tax Circular No. 17/11/96, dated 24-10-1996 (a copy of which is enclosed as Annexure-II) in any of the bank branches, at present authorised to collect Central Excise Duties within the jurisdiction of Commissionerate of Central Excise, Delhi-I. A list of such branches along with the codes Nos. (Annexure-III) is enclosed. It is to be noted that each assessee shall choose only one branch convenient to him and all payment shall be made in that branch only. 6.5 The concept of provisional assessment has been built into the scheme of Service Tax Rules. Whenever an assessee, for any reason unable to correctly estimate on the date of deposit, the actual amounts collected for any particular month of period, the assessee may make a request in writing to the concerned Assistant Commissioner of Central Excise (Service Tax) to make a provisional assessment of the tax on the basis of the amount deposited. The said Central Excise Officer will, on receipt of such request, order provisional assessment of tax. In this regard, the provisions of Central Excise Rules, 1944 have been made applicable. However, there is no requirement to enter into a bond in respect of service tax. 6.6 The Assessee will file the quarterly return in Form ST-3 as amended vide Notification No. 15/97, dated 25-4-1997 in (Annexure-IV)1 in triplicate. In respect of provisional assessment, the assessee is required to submit a memorandum in Form ST-3A (Annexure-V)1 showing details of difference between the service tax deposited and the service tax actually collected for each month. The assessee shall submit quarterly return along with the copy each of Form TR-6 for the months covered in the quarter. 6.7 The assessment shall be completed on the basis of the particulars furnished in the quarterly return ST-3 and ST-3A , by the said Central Excise Officer. The triplicate copy of the quarterly return so assessed shall be returned to the assessee with assessment memorandum. In cases where the service tax assessed is more than the service tax self determined and paid by the assessee, the assessee shall pay the deficiency along with the amount of interest determined thereon within 10 days of the receipt of the copy of the quarterly return from the Central Excise Officer. The assessee may apply for refund, whenever he has paid service tax in excess of tax assessed, in accordance with the provisions of Section 11B of the Central Excise Act, 1944 . Appellate mechanism 7. Appellate mechanism provided in Central Excise Act, 1944 has been made applicable to Service Tax with some modifications. ( Section 85 and Section 86 of Finance Act, 1994 may be referred to). 8. Administrative machinery for collection of service tax (1) A Service Tax Cell has been created in the jurisdiction of Divisional offices of Delhi-I Commissionerate of Central Excise. The address and jurisdiction of Divisional offices is enclosed. (2) The trade may please note that (a) Application for registration in Form ST-1 received from the assessee shall be acknowledged by an officer of the rank of Superintendent of Central Excise. (b) Certificate of registration in the Form ST-2 will be issued under the name and signature of the Assistant Commissioner. (c) The service tax collected during any calendar month by the assessee under sub-section (1) of Section 68 of the Finance Act, 1994 shall be paid to the credit of Central Government in Form TR-6 by the 15th of the following month. (d) Any person, responsible for collecting the Service Tax, who fails to collect the tax in accordance with the provisions of sub-section (2), shall notwithstanding such failure be liable to pay such tax to the credit of the Central Government within SEVENTY FIVE DAYS from the end of the month in which the service was rendered. (e) Quarterly return filed by the assessee (para 4.7 above) will be assessed by the Superintendent of Central Excise (Service Tax). (f) For the purpose of provisional assessment whenever the Assistant Commissioner will make an order for provisional assessment for the tax, on request being received in writing from the Assessee. (g) The powers of Assessment under Sections 72 , 73 and 74 , of Chapter V of the Finance Act, 1994 dealing with best judgment Assessment, value of taxable service, escaping assessment, rectification of mistake will be exercised by the Assistant Commissioner. In respect of assessment periods of 5 years or more referred in Section 73 of the Finance Act, 1994 (32 of 1994), Commissioner will be the competent authority to exercise the powers.