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TMI BlogService Tax on GTA on Despatches made on Ex-Works basisX X X X Extracts X X X X X X X X Extracts X X X X ..... Request your opinion on Service Tax on GTA against the transaction as explained below. Consignor of the goods is a Limited Company. The Consignees are not one of persons mentioned in Rule 2(1)(d)(v) Consignor despatches the goods to Customers/buyers on Ex-works basis. Transfer of property takes place at factory gate. The Customers/buyers take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material from Consignor s premises on following ways: (a) The Customers/buyers bring their own vehicles and take delivery of the material No Consignment note issued OR (b) On request of Customers/buyers, the Consignor arrange the transportation of goods through GTA on Freight-to-pay basis. The GTA issues consignment note (Lorry Receipt) on To-pay basis and collect Freight charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from consignees after delivering the goods. Normally the GTA is not registered under Service Tax except some reputed transporters like TCI Since the billing is on Ex-works basis, the consignor is not discharging service tax on GTA though the consignor is one of the person mentioned in Rule 2(1)(d)(v) as the freight charges are not being accounted in the books of consign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or. We understand that neither consignee nor GTA discharging service tax on GTA on above said situation mentioned at (a) (b) In this connection, we request you to give us your opinion on liability of Service Tax payment (Consignor/Consignee/GTA) Thanks - Reply By Rajagopalan Ranganathan - The Reply = Sir, Answer to your query (a) is as follows: - Since he Customers/buyers bring their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own vehicles and take delivery of the material, no service tax is payable on the ground that your customer is providing GTA service to himself. Answer to query (b) is as follows: - The Consignor arrange the transportation of goods through GTA on Freight-to-pay basis. Though consignor is a person mentioned in rule 2(1)(d)(v) of Service Tax Rules, 1994 and since he arrange the transportati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of goods through GTA on Freight-to-pay basis freight will be paid by the consignee. Consignee is not a person in mentioned in Rule 2(1)(d)(v) of Service Tax Rules, 1994 he is not liable to pay service tax. Therefore service tax is payable by the GTA. - Reply By Ganeshan Kalyani - The Reply = Yes if the consignee is not liable to pay service tax because he is not a person as mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 2 (1) (d) (v) and consignor is not liable to pay service tax as he is neither availing the service nor paying freight amount then in that case GTA is the person liable to pay service tax on the GTA service provided. - Reply By YAGAY AND SUN - The Reply = Dear Saket, In Ex Works transaction, Goods are removed on factory gate and buyer is responsible to arrange the transportation and liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to pay the freight on such events. Hence, the liability to pay the service tax would be shifted from you to your customer. Regards, YAGAY and SUN (Management, Business and Indirect Tax Consultants) - Reply By Ganeshan Kalyani - The Reply = The reply submitted by Rajagopalan sir is apt. However the service tax on GTA service is very much unorganized. Generally it tends to happen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the consignor is not the person as mentioned in the provision for paying service tax. Also consignee is not the person as mentioned in the provision for paying service tax. Further the GTA is liable to pay service tax as both consignor and consignee are not the person as mentioned in the provisions for paying service tax. However, in practice the service tax is not paid by the GTA because the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA does not accept the responsibility or does not aware of their responsibility that if both consignor or consignee are not the person paying service tax, GTA should discharge the liability. Therefore there are various notices being issued on GTA for recovery of service tax in practice. Thus consignor, consignee and GTA should discuss these things before the transactions is done. - Reply By saket ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s - The Reply = Thank you all for your valuable inputs. - Reply By Vishal Kulkarni - The Reply = Dear All, I beg to defer on views provided by the other experts. We should refer to Rule 2(1)(d)(i)(B) of Service tax Rules, 1994 wherein it has been provided that any person who pays freight to GTA is liable to discharge Service tax. Accordingly, in the present facts: A) If customer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransports goods in its own vehicle then there is no service provider and service recipient relationship as customer is rendering services to himself- hence, no Service tax; if Customer hires GAT agency and pays freight for said transportation then Customer is liable to discharge Service tax. However, Service tax credit would be available to them as input service. In case of B B) Customer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to pay Service tax as he will pay freight to GAT agency as freight term is to be pay basis. Regards, Vishal Kulkarni - Service Tax on GTA on Despatches made on Ex-Works basis - Query Started By: - saket s Dated:- 27-11-2015 Service Tax - Got 6 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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