Circular No.186/5/2015-ST, Service Tax

[Sarfraz Khan]

Dear Sir,

I am working in a Transportation company, till September I didnt charge service on transportation charges as service receiver will pay service tax on 30% and 70% abetment under reverse charge mechanism , Now with the mentioned circular Circular No.186/5/2015-ST do I need to charge service tax on Transportation 14% or what is exactly the circular wanted to say. and what would be the effective date if its from 5th october then what about the Invoices which are already raised in between.

Thanks sir.

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

In para 4 of the Circular No.186/5/2015-ST dated 05.10.2015 it is clarified that any ancillary service provided with GTA service and a single consignment note is issued for the entire service including the ancillary services provided by GTA that service will be treated as GTA service and 70% abatement can be availed on the entire value charged by GTA for providing the service. The Department cannot split the services into different services and restrict the abatement only for GTA service and cannot say that the abatement is not applicable to ancillary service. The relevant portion of the circular is reproduced below: -

"If ancillary services are provided in the course of transportation of goods by road and the charges for such services are included in the invoice issued by the GTA, and not by any other person, such services would form part of GTA service and, therefore, the abatement of 70%, presently applicable to GTA service, would be available on it".

The service tax is payable @14% of 30% of the value indicated in the invoice issued by GTA. Past transactions will not be affected by this circular since the circular has only prospective effect.

[Sarfraz Khan]

Dear Sir,

Thank you so much for your swift response, What I understand is

If the Transportation Invoice value is ₹ 10,000/- 30% will be ₹ 3000/- and on that ₹ 3000/- 14% will be ₹ 420/- to be charged as a Service Tax is it right.

my another question is : circular issued dt 15.10.2015 but still we have not charged service tax on whatever Invoices has been raised to customer , what would be the solution.

[Rajagopalan Ranganathan]

Sir,

Please immediately raise supplementary invoice charging service tax from your customers. Otherwise you will be charged by the Department that you have not discharged service tax on GTA in time. The workings indicated by you is alright.

[YAGAY AND SUN]

This abatement further subject to non availability of CENVAT credit on inputs, Input services and Capital goods.

[Ganeshan Kalyani]

The service tax on GTA is paid by the person paying freight. Therefore if any ancillary services related to GTA should also be paid by the person paying freight. this is my opinion.

[Sarfraz Khan]

Dear Sir,

Here is a major question is that up to now what we used to do is we charge Transportation charges eg : 10,000 and service receiver will pay Service tax to the Govt @14% of that 30% amount.

but now instead of paying service tax to govt by service receiver, service provider will collect from client and pay to the customer right ?

[Ganeshan Kalyani]

Under reverse charge the service tax payable by the person other than service provider is 30% for GTA. It means service provider is freed from liability of collecting and discharging service tax. Further in recent amendment only the ancillary services related to GTA would also be considered as GTA and therefore there is no change in the responsibility of person paying freight. hence as existing upto now that the person paying freight shall pay the service tax is still continues. This is my opinion. Expecting senior's comment on the same.

[Rajagopalan Ranganathan]

Sir,

According to rule 2 (d) (B) of Service Tax Rules, 1994,-

“person liable for paying service tax”, -

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:

Therefore only in case of proprietary firms, association of persons , the service provider, that is, GTA is liable to pay service tax. In all other cases the service tax is payable by the person who pays the freight.

[ashish chaudhary]

If service provided to specified persons: service tax under RCM by service receiver (invoice amount*30%*14%)

If service provided to individual/proprietor: Tax payable by GTA (invoice amount*30%*14%)

{Above tax calculation is subject to condition that no credit taken by GTA on input, input service and capital goods. If credit taken, tax needs to be paid at full invoice amount without abatement}

Circular does not alter position as to taxability and person liable to pay tax. The circular is issued to clarify that incidental services of GTA are also taxable under GTA category only.