1. Goods transport agency Service
1.1. Definition
of Goods transport Agency (GTA)
As per section 65B(26) of Finance act, 1994, “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.
As per section 65B(20) of the act, "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.
Consignment note: As per explanation to rule 4B of service tax rules, 1994, means a
document, issued by a goods transport agency against the receipt of goods for
the purpose of transport of goods by road in a goods carriage, which is
serially numbered, and contains the name of the consignor and consignee,
registration number of the goods carriage in which the goods are transported,
details of the goods transported, details of the place of origin and
destination, person liable for paying service tax whether consignor, consignee
or the goods transport agency.'
Relevance of
Consignment note: As per Rule 4B of Service tax rules, 1994, GTA which
provides services in relation to transport of goods by road in a goods carriage
is required to issue consignment note. Thus, issue of consignment note is
compulsory for GTA and not to all transporters.
Service of
transport of goods by Truck owner / truck operator: if individual truck owner or person takes truck on hire to provide
transportation of goods service and receives freight directly from consignor/
consignee would not issue consignment note. In such case he would not liable to
pay service tax. Hence, service of transport booking agents would be subject to
tax and truck owner or truck operator would not be subject to tax under GTA
service.
1.2. Declared
service
As per section
66D(p) of the act, services by way of transport of goods by road by a goods
transport agency or courier agency shall be taxable service.
1.3. Exemption
for GTA service:
As per mega
exemption notification 25/ 2012-ST, dated 20-6-2012, as per entry no. 21 following
services provided by a GTA by way of transportation of goods by road would be
exempt-
(a)
fruits, vegetables, eggs, milk, food grains or
pulses in a goods carriage;
(b)
goods where gross amount charged for the
transportation of goods on a consignment transported in a single goods carriage
does not exceed one thousand five hundred rupees; or
(c)
goods, where gross amount charged for transportation
of all such goods for a single consignee in the goods carriage does not exceed
rupees seven hundred fifty
Further, following additional exemption has been provided in Finance act,
2013 for services provided by a GTA by way of transportation of goods by road:
a)
agricultural produce
b)
foodstuff including flours, tea, coffee, jaggery,
sugar, milk products, salt and edible oil, excluding alcoholic beverages;
c)
chemical fertilizer and oilcakes;
d)
newspaper or magazines registered with the Registrar
of Newspapers;
e)
relief materials meant for victims of natural or
man-made disasters, calamities, accidents or mishap; or
f)
defense or military equipments
(Agro Dutch Industries v. CCE (2011) 32 STT 185 (CESTAT) – Transport of
canned food is not transport of fruits or vegetable; hence not exempt in the above
entry.)
1.4. Value
of service for Service tax liability:
Whether person liable to pay service tax on GTA service would pay service
tax on full value service of GTA or abatement of 75% on value of services, as
per notification 26/2012-ST dated 20-6-2012, would be available?
Person who would be liable to pay service tax on GTA would obtain
certificate from GTA that he has not availed Cenvat credit and accordingly,
person liable to pay service tax would avail benefit of 75% abatement as per
notification. If person liable to pay service tax does not obtain certificate,
he would be liable to pay service tax on entire value of the service without
availing abatement.
1.5. Abatement
on GTA service:
As per
notification 26/2012-ST dated 20.6.2012, Services of goods transport agency in
relation to transportation of goods, service tax
would be payable on 25% of value and no cenvat credit would be availed.
1.6. Reverse
charge mechanism on GTA service:
As per notification no. 30/2012-ST dated 20.6.2012, in case of services provided
by a goods trasnpsort agency (GTA) in respect of transportation of goods by
road, any person who is liable to pay freight either himself or through his
agent would be liable to pay 100% service tax on abated value of services
received from GTA.
The person liable to pay freight would be,—
(a)
any factory registered under or governed by the
Factories Act, 1948 (63 of 1948);
(b)
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;
(c)
any co-operative society established by or
under any law;
(d)
any dealer of excisable goods, who is
registered under the Central Excise Act, 1944 (1 of 1944) or the rules made
thereunder;
(e)
any body corporate established, by or
under any law; or
(f)
any partnership firm whether registered or not
under any law including association of persons;
As per proviso to Rule 2(d)(B) of service tax rules, if freight is
payable by person located in a non-taxable territory, GTA service provider
would be liable to pay service tax.
Further, GTA would be liable only when consignor or consignee is
individual.
1.7. Place
of provision of GTA service:
As per Rule 10 of place of provision of services rules, the place of
provision of services of GTA would be the location of the person liable to pay
tax.
1.8. Notification
and circulars
a)
Transport of goods for export
Service provided to an exporter
for transport of the said goods by goods transport agency in a goods
carriage from any container freight
station or inland container depot to the port or airport, as the case may be, from
where the goods are exported; or Service provided to an exporter in relation to
transport of the said goods by goods transport agency in a goods carriage directly from their place of removal, to an
inland container depot, a container freight station, a port or airport, as the
case may be, from where the goods are exported would be exempt from the whole
of the service tax leviable thereon under section 66B of the Act. However, The
exporter shall have to produce the consignment note, by whatever name called,
issued in his name. Further, such exemption would be granted subject to
conditions specified in Notification
No. 31/2012 - Service Tax, dated 20.06.2012.
b)
CBEC Circular no. 95/6/2007-ST
dated 11.6.2007
“in case of small consignments, it would not be
feasible to mention truck No. on consignment note as the truck No. may not be
known at the time of booking of cargo. Therefore, in respect of small
consignments, where truck number is not known, an endorsement, i.e., “truck
number not known” may be made on customers copy of consignment note, against
the entry for truck No. As and when the truck No is known, the goods transport
agency shall make an entry of trucks No. in their copy of consignment note to
satisfy the requirements of said rule 4B and also for any future reference.
Similarly, in case of transshipment of goods, the goods transport agency would
make entry of such transshipment, in their copy of consignment note. For
example, if goods moves from Delhi to Agra, and is transshipped there for
further movement to Mumbai, the goods transport agency would mention in his
copy of consignment note, against vehicle No. as “ (i) Delhi to Agra: Vehicle
No.- XXX (ii)Agra to Mumbai: Vehicle No.- XXXX”. This would satisfy the
requirement of the said rule 4B”.
c)
As per CBEC circular no.
104/07/2008-ST dated 6.8.2008: -
i.
GTA has provided a single composite service which
includes various intermediary and ancillary service such as loading/ unloading,
packing/ unpacking, transshipment, temporary warehousing. For such service
provided, GTA issues a consignment note and the invoice issued by the GTA for
providing the said service includes the value of intermediary and ancillary
services. In such a case, the intermediary or ancillary activities are to be
treated as part of GTA service and abatement should be extended to the charge
for such intermediary or ancillary service.
ii.
GTA undertakes time sensitive transportation of
goods and entire transportation is undertaken by road and GTA issues a
consignment note, such service would be classified as GTA service and not as a
courier service.
d) Not allowed to pay
GTA service tax by Cenvat: As per Cenvat credit rule
2(p), consignor/ consignee cannot pay service tax through Cenvat credit.
e) Cenvat credit of
service tax paid on GTA service: As per circular
no. 97/8/2007-ST dated 23-8-2007, consignor/ consignee can avail Cenvat credit
of service tax paid on inward transportation of inputs and capital goods.
Further as per circular no. F.No. 137/3/2006-CX4 dated 2.2.2006 – in case of
depot sales, the credit of service tax paid on the transportation of goods upto
such depot would be eligible, irrespective of the fact, whether the goods were
chargeable to excise duty at specific rate or ad valorem rates on the basis of
valuation under section 4 or 4A of central excise act, 1942.
However, if final products are cleared from place of
removal and then goods are transport to place of delivery or at customer’s
premises, such outward transportation cannot be treated as input for Cenvat
credit. (Gujarat Ambuja Cement Ltd v. CCE, Ludhiana (2007) 212 ELT 410 (Cestat,
New Delhi)
f)
No recovery of GTA service tax from customer: As per circular no. 341/18/2004-ST dated 17.12.2004, If service tax due
on transportation of a consignment has been paid or is payable by a person
liable to pay service tax, service tax should not be charged for the same
amount from any other person, to avoid double taxation. Accordingly, consignor
should not charge any amount from consignee as service tax on services of GTA.
g) Registration by
GTA: As per circular no. 341/18/2004-ST dated
17.12.2004, According to provisions of section 69 of the Finance Act, 1994,
requirement of registration is limited to persons liable to pay service tax.
Thus those goods transport agencies, which are not liable to pay any service
tax, are not required to be registered under the service tax rules.
h) Courier, express
cargo and Angadia services: As per CBEC ‘taxation of
services: An Education guide’ issued on 20-6-2012, courier, express cargo and
angadia services would be subject to tax.
i)
Value based exemption: In case of GTA services, if gross amount of consignment in vehicle is
less than Rs. 1500 or Individual consignment of consignee is less than Rs. 750
then service tax would not be liable to be paid. For e.g. two consignments
worth Rs. 400 each are sent in a vehicle (a carriage) of same consignee then on
Rs. 800 tax would be applicable. However, if consignments of different
consignee of less than Rs. 750 are transported totaling Rs. 10,000 in a
carriage, in such case service tax would not be applicable.
1.9. Judgments
Siggil India Ltd v. CCE, C&ST, Visakhapatnam (2010) 19 STR 747
(Cestat, Bangalore) – where goods were transported in own vehicle and freight
amount collected, appellant being an owner of vehicle, was not liable for
service tax payment.
In following judgments, for claiming abatement, declaration on assessee’s
letterhead was sufficient and that declaration in invoice was only procedural.
Non compliance with conditions cannot deny the benefit of abatement.
Declaration could be filed even on the company’s letterhead:
·
CCE, C &ST v Neral Paper Mills Pvt Ltd (2010) 20
STR 601 (Gujarat)
·
Sri Venkata Balaji Jute Pvt Ltd v CCE (2010) 19 STR
403 (Cestat, Bangalore)
·
Andhra Pradesh Paper Mills Ltd v CCE (2010) 19 STR
557 (Cestat, Bangalore)
·
RAK Ceramics India Pvt Ltd v. CCE, Visakhapatnam
(2010) 19 STR 751 (Cestat, Bangalore)
