Taxation and exemption for a Goods transport agency Introduction The transportation of goods by goods transport agency (GTA) has not been specified in negative list. With effect from 01.07.2012 taxability of services of goods transportation by GTA is as follows: 1)      Transportation of goods by GTA is taxable. 2)      Certain services of transportation of goods by GTA are exempt from payment of service tax. 3)      Exemption to hiring of vehicle for transportation of goods by GTA 4)      The payment  of service tax by reverse charge for service provided by GTA 5)      Abatement in value for determining the value of taxable services for services by GTA Scope of Taxability Goods transport agency means any person who provides services in relation to transport of goods by road and issues consignment note, by whatever name called. Analysis The services shall be provided by GTA. It must provide the services in relation to transport of goods by road and must issue consignment note by whatever name called. There is reverse charge mechanism in this type of services in which 100% service tax liability is of that person who received the services. Scope of exemption There is exemption relating to specified services. Service provided by a goods transport agency by way of transportation of:- a)      Fruits, vegetables, eggs, milk, food grains, or pulses in a goods carriage b)      Goods where gross amount charged for transportation of goods on a consignment transported in a single goods carriage does not exceed Rs. 1500/- c)       Goods where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed Rs. 750/-. Reverse Charge in respect of GTA services As per finance act dated 20.06.2012 service tax is payable by recipient of service in respect of service provided by goods transport agency for transportation of goods by road where the consignee is any of the following:- a)      Any factory registered under or governed by the factories act 1948. b)      Any society registered under society’s registration Act 1860. c)       Any co operative society established by or under any law. d)      Any dealer of excisable goods, who is registered under Central Excise Act, 1944. e)      Anybody corporate established by or under any law f)       Any partnership firm whether registered or not under any law including association of persons. The notification provides that service tax is payable by the person who pays or is liable to pay freight by himself or through agent for transportation of goods by road in goods carriage located in taxable territory shall be treated as person who receives services for the purpose of this notification. Thus the liability to pay service tax is upon the person who as per the contract is liable to pay the amount to the transporter. If payment is made by person other than mentioned above the service tax is payable by provider of services. Issue of Consignment note is mandatory Under rule 4B inserted by service tax rules It is mandatory for every goods transport agency which provides services in relation transport of goods by road to issue a consignment note to the recipient of services containing the prescribed particulars. Failure to do so would be violation of law. Relaxation to small consignments The Board has clarified that, in respect of small consignments where truck number is not known, an endorsement to the effect that truck number not known may be made on service receiver’s copy of the consignment note against entry for truck number. As and when the truck number is known the goods transport agency shall make an entry of the truck number in its copy of consignment note in order to satisfy the requirement for any other future references. Services Provided by person who does not issue consignment note is not taxable If driver of goods carriage is self employed either by taking vehicle on rent from others or as owner of one or two vehicles, he does not issue any consignment note. He has direct contract with consignor/ consignee. He himself receives freight from consignor/ consignee. He would not be liable to service tax. Thanks for reading for this article. Please feel free to write to us, We want to hear it all!Suggestions? Complaints? Feedback? Requests?  at [info@taxmantra.com] or call us at +91 88208208 11. We would be more than happy to assist you.