As per Finance Act 1994, ‘Goods Transport Agency (GTA)’ means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
The Finance Act, 1997 had levied Service Tax on Goods Transporter in 1997 which was subsequently withdrawn after nation-wide strike. Finally, levying service tax on Transport of Goods by Road is made w.e.f. 01.01.2005.
The GTA service is enumerated under reverse charge notification no. 30/2012 dated 20.06.2012. As per the notification, full service tax shall be paid by the person liable for paying service tax other than the service provider after considering abatement. The abatement for GTA service as given under notification no. 26/2012 Dated 20.06.2012 as amended from time to time is 70% and therefore 30% of service tax is liable to be paid. In fact, the abatement ratio has been amended vide notification no.8/2015 dated 1st March, 2015 and the change of abatement from 75% to 70% is w.e.f.1st April, 2015. The said abatement is eligible subject to the conditions as amended in the said notification. The extract of the condition is depicted below for reference –
‘CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.’
As per Service Tax Rules, 1994, the person who pays or is liable to pay freight, either himself or through his agent, for the transport of goods by road in a goods carriage, has been made liable to pay service tax. But, if the person liable to pay freight is located in non-taxable territory, then the person liable to pay service tax shall be the service provider.
A provision exists in Service Tax which exempts the taxable service provided by a goods transport agency to a customer, from the whole of service tax, in such cases where,-
- the gross amount charged on consignments transported in a goods carriage does not exceed rupees on thousand five hundred or
- the gross amount charged on an individual consignment transported on a goods carriage does not exceed rupees seven hundred fifty.
For the purpose of this provision, “an individual consignment” would mean all goods transported by a goods transport agency by road in a goods carriage for a consignee.
(The above article is authored by Ganeshan Kalyani and he can be reached via email on email@example.com)