GTA - Hiring of Vehicle on Per Day Basis without any LR, Service Tax

[PAWAN KUMAR SHARMA]

Dear Sir,

Presently, we have a contract with one of Travel Agent who will provide us vehicles on per day basis as and when demanded, the rate is fixed for 8 hrs in a day and for every additional hour, if total hours are more than 8 hrs. The usage of the vehicle is for local movement, movement within the plant.

He is billing us on monthly basis and not charging any tax as his total taxable services are below 10 lacs.

We are also not depositng any service tax on such payments and rather we are deduction TDS under sec 194 C.

I want to clarify that

1. Whether this will come under the preview of GTA or Not ? (considering that there is No LR/Consignment Note for these movements.)

2. Suppose this services are covered under GTA, whether by taking a declaration from the vendor that his services are below 10 lac, can we escaped from the liability of service tax under GTA ?

3. Whether the procedure we are following is correct as per the laws ?

Posts / Replies

[NEERAJ KUMAR, RANCHI]

Dear Mr sharma,

Assuming that you are talking about hiring of a car/taxi from a travel agent my answer is as below:

earlier also on the same line I had replied on question. You must understand that GTA as its name specified stands for goods transport and not for public transport carriage. The service you are taking is well covered under rent-a- cab services. In this service service receipient is not liable to pay service tax as is the case with GTA. So, you dont need to bother at all. it is the responsibility of the serv ice provider to get himself registered and collect service tax and pay the same. Yes, if  department may ask youu in course of some investigation against such parties about the total payment made so keep record to that extent ffor five years. So dont worry and have fun.

regards

Neeraj

[PAWAN KUMAR SHARMA]

Thanks for your advice, in reality he is providing a truck which is being used for goods movements (as already mentioned in my query), will it makes difference in your opinion with such facts.

[Dilip Darji]

That in view of the fact that the travel agency with whom you have enetred into a contract is not issuing any consignment note, you are out of the purview of the service tax under TRANSPORATION OF GOODS BY ROAD, for the legal reason that as per Section 65 (50b) of the The Finance Act "Goods Transport agency means any person who provides services in relation to transport of goods by road and issues conbsignment note, by whatever name called".

Point No.2 and 3 are not relevant inview of detailed reply to point No.1.

[Radha Arun]

The crucial issue is whether the agent is actually transporting the goods for you, or whether he is merely providing the vehicle. If he is responsible for the goods, he is the transporter, and ought to issue consignment note under Rule 4B.The mere fact that he breaks the law by not issuing it may not be a defence.

As per Rule 4B of the Service Tax Rules, a consignment note is a document issued "against the receipt of goods for transport".  If the agent does not "receive the goods for transport"  through his driver or other person in the vehicle, then he is only supplying the vehicle. In such a case it is not GTA service, and the recipient of service is not liable.

So, what are the terms of the arrangement with the agent; this will determine the taxability.

[PAWAN KUMAR SHARMA]

Thanks to All,

All discussion concludes that if transporter is not taking the charge of goods vide their consignment note, then it is a case of mere supplying of Vehicle for any purpose and will not be come under GTA provisions.

[NEERAJ KUMAR, RANCHI]

No no, I never meant that, I very clearly mentioned in my answer that that answer was applicable only if your were hiring a car/taxi. Now since you have clarified that you are taking services of a truck for carying goods, things are not so simple. In this case service beingreceived by you falls under the category of GTA and therefore your responsibility also comes there, As per Notification 35/2004 in case of GTA service receipients are liable to pay service tax on the vcalue of services received by the, transporters are required to issue proper invoices as prescribed mentioning the exact amount of service tax under Rule 4 B of service tax Rules. So make sure that your transporter issue you a proper invoice and you pay the service tax on that amount.

thanx

regards

 

Neeraj

[PAWAN KUMAR SHARMA]

In our case, transporter basically Travel agent from whom we have hire the vehicle, he is not giving any LR or Consignment for taking charge of the goods, secondly, as he is not taking any charge, he is not responsbile for any shortages, damages during movements, so want to know whether under such situation still it will be under the preview of GTA. His main business is of booking tickets, providng taxi on hire etc. Is there any specific terms by which it can be clearly out of GTA.