News Update

CRS Disclosure - OECD seeks inputs on Model Disclosure RulesIT Sector urges FM to lower GST on telecom services to 12%NIC CERT launched to predict cyber attacksConnectivity with ASEAN is India's priority: GovtTreading GST Path - XXXIX - Tribunal at crossroadsST - Denial of CENVAT credit on ground of failure to deposit tax by service provider is not correct in equity when there is no express condition to that effect in CCR, 2004: CESTATI-T - Reopening of concluded assessment by invoking provision of section 147 will not fall under ambit of change of opinion where AO formed an opinion contrary to binding decision of Apex Court: ITATCus - A court is expected to make an overall assessment of fact situation and test same on touchstone of law to reach to its conclusion: CESTATVice President calls for ranking of legislatures & notifying disruptors on daily basisOnline exam portal of IAF launchedPre-Budget Meet - Economists ask FM to lower MAT & spell out roadmap for tax reformsNadda launches Operational Guidelines for HDUs & ICUsRahul Gandhi formally elected unopposed Congress President; PM congratulates him on his elevationCBDT Task Force for reviewing Income Tax Law to hold its first meeting on Dec 14, 2017NCLT Favoring takeover of Unitech Management- Apex court to hear case tomorrowRyan Row- SC Declines to repose trust in trustees in bail applicationReal Estate- ITC a double edged sword under GSTI-T - Assessees cannot avail Post decisional hearing if their case is transferred u/s 127 to some other I-T Officer located in same city: HCST - Service of taking repossession of vehicle from borrower is a part of 'security' service which is specifically included in definition of input service: CESTATCX - Tribunal, not being court of equity, it is difficult to entertain prayer of appellant for grant of interest from date of deposit made in accordance with HC order: CESTATWTO Meet in Buenos Aires - India hopeful of support on food security issueOver 15 mn girls aged between 15 to 19 experienced forced sex: UNICEF
 
Service tax on GTAs : Make it 2.5 per cent with no strings attached

By TIOL Edit Team

SERVICE Tax on Goods Transport Agency has come into effect from 1st Jan 2005, with a number of Notifications issued by the MoF on various issues. After one month of experience, it is worthwhile to review the difficulties faced by all those concerned with the policy decision. Given the fact that the Goods Transport Agents were up in arms against this levy on them, the Government followed the recommendations of the Bhardwaj Committee and shifted the liability of paying Tax from the GTAs to either consignors or consignees. This peculiar concept of making the recipient of the Service liable to pay tax has created serious problems for the taxpayers.

As per Rule 2(1)(d)(v) of the Service Tax Rules, the consignee or consignor falling under the categories specified therein is liable to pay the tax. But the amount of tax to be paid is governed by the Notification 32/2004 dated 3.12.2004. This Notification exempts 75% of the gross amount charged from service tax, subject to the condition that no credit shall be availed on the inputs/capital goods used under the provisions of the Cenvat Credit Rules, 2004 for providing such taxable service. If the gross amount paid is Rs 100, the duty liability under this notification would be Rs 2.5 (10% on Rs 25). Thus, the effective tax liability would be at 2.5% on the gross amount charged (for the sake of brevity, education cess is ignored). This amount has to be assessed by the consignee or consignor and the condition of “not availing the credit” has to be fulfilled by the GTA! How can the consignor or consignee ensure that the GTA stationed at a far off place has taken credit or not? So the consignors/consignees who are willing to take registration and pay tax are in utter confusion as to whether they can avail the benefit of Notification 32/2004 or not and also how it is possible for them to ensure that the GTA has not availed any credit. And what is the machinery available to check this?

And, what would happen if the consignor /consignee pays 2.5% tax and the GTA takes credit without the knowledge of the consignee/consignor? Can the department ask them to pay 10% instead of 2.5% from the consignor/consignee for a violation by the GTA on which they have no control? Going by the past experience in input credit disputes, it is all likely that the consignor /consignee cannot be penalized for the violation on part of the GTA.

But, why there should be such condition in the Notification? Obviously no inputs are required for providing the Service of a GTA ( HSD and MS are excluded from the definition of inputs). The only item they can take credit is perhaps a one time excise duty paid on a Truck. But that would make not only their consignee/consignors not entitled for exemption under Notification 32/2004 , but also the GTA himself, in cases where the GTA is liable to pay service tax. Between the options of paying service tax at full rate by availing onetime credit on the Truck, and paying only 2.5% by not availing the credit, more and more GTA s would choose only the later option.

Instead of the above, it is better that the Government exclude the GTAs from the purview of Cenvat Credit and make the tax effective at 2.5% across the board and give wide publicity. A tax rate at 2.5% is not a very horrifying and perhaps this kind of presentation would make more and more assessees voluntarily contribute to the kitty and thus make this difficult task of taxing the truckers a smooth ride. Perhaps North Block needs to borrow a few marketing strategies from the corporate houses too!


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Service tax on GTAs Make it 2 5 per cent with no strings attached

Sir,


I am working in manufacturing industry and we are purchasing raw material through transport like AFL Logistics,Gatti Cargo and we are paying freight charges but the transporter himself collected the freight charges and with service tax.

We are registered with Service tax dept in GTA service.Dept asking to pay service tax for freight.But Transporter also charging service tax.

Kindly reply



Posted by ramesh ramesh
 
Shemaleup.net x-comics.org vr-porn360.net