Services by way of transportation of goods - Service Tax Practice Manual / Ready Reckoner - Service Tax

Chapter 16 Services by way of transportation of goods Effective date: 1.7.2012 Scope of Negative Service Section 66D(p) W.e.f. 1.7.2012 to 31.5.2016 Services by way of transportation of goods (i) by road except the services of (A) a goods transportation agency; or (B) a courier agency; (ii) by an aircraft or a vessel from a place outside India to the first customs station of clearance in India; or (iii) by inland waterways; W.e.f. 1.6.2016 Services by way of transportation of goods (i) by road except the services of (A) a goods transportation agency; or (B) a courier agency; (ii) [***] (iii) by inland waterways; Notes: Amendment w.e.f. 1.6.2016 The entry in the Negative List that covers services by way of transportation of goods by an aircraft or a vessel from a place outside India up to the customs station of clearance [ section 66D (p)(ii) ] has been omitted with effect from 1.06.2016. Clause 146 of Finance Bill 2016 may please be seen in this regard. However such services by an aircraft will continue to be exempted by way of exemption notification [ Not. No. 25/2012-ST , as amended by notification No. 09/2016-ST dated 1st March, 2016 refers]. The domestic shipping lines registered in India will pay service tax under forward charge while the services availed from foreign shipping line by a business entity located in India will get taxed under reverse charge at the hands of the business entity. The service tax so paid will be available as credit with the Indian manufacturer or service provider availing such services (subject to fulfillment of the other existing conditions). It is clarified that service tax levied on such services shall not be part of value for custom duty purposes. In addition, Cenvat credit of eligible inputs, capital goods and input services is being allowed for providing the service by way of transportation of goods by a vessel from the customs station of clearance in India to a place outside India. Consequential amendments are made in Cenvat Credit Rules, 2004 [ Not. No. 23/2004-CE (N.T.), as amended by Sl. Nos. 2(b) and 5(h) of notification No. 13/2016-C.E. (N.T.) dated refers. ] Here followings exemptions must be noted: Notification no.25/2012-ST, dated 26-6-2012 -Services by way of transportation by rail or a vessel from one place in India to another of specified goods -Services provided by a goods transport agency, by way of transport in a goods carriage of, specified goods Meanings and Definitions: Section 65B(7) - aircraft has the meaning assigned to it in clause (1) of section 2 of the Aircraft Act, 1934; Section 65B(20) - courier agency means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles; Section 65B(21) - customs station shall have the meaning assigned to it in clause (13) of section 2 of the Customs Act, 1962. (52 of 1962.) Section 65B(25) - goods means every kind of movable property other than actionable claim and money; and includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale; Section 65B(26) - 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; Section 65B(27) - India means, (a) the territory of the Union as referred to in clauses (2) and (3) of article 1 of the Constitution ; (b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976; (z80 of 1976.) (c) the seabed and the subsoil underlying the territorial waters; (d) the air space above its territory and territorial water and (e) the installations, structures and vessels located in the continental shelf of India and the exclusive economic zone of India, for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof; Section 65B(29) - inland waterway means national waterways as defined in clause (h) of section 2 of the Inland Waterways Authority of India Act, 1985 (82 of 1985.) or other waterway on any inland water, as defined in clause (b) of section 2 of the Inland Vessels Act, 1917; (1 of 1917.) Section 65B(53) - vessel has the meaning assigned to it in clause (z) of section 2 of the Major Port Trusts Act, 1963; (38 of 1963.) Clarification by the Board (Taxation Guide Guidance Note 4 Exemptions dated 20.06.2012) 4.16.1 Are all services provided by goods transport agency excluded from the negative list? Yes. However, there are separate exemptions available to the services provided by the goods transport agency. These are services by way of transportation 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; Here foodstuff includes milk. Therefore, service by way of transporation of mik by rail or vessel from one place in India to another, is exempt from service tax. 4.16.2 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. 4.16.3 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. 4.16.4 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. 4.16.5 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 4.16.6 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.