Can we avail service tax on Good transport agency ?
CA B.K.BANSAL
(Querist) 03 March 2008
This query is : Resolved
New Delhi, the 1st March, 2008
Notification No. 13/2008-Service Tax 11 Phalguna, 1929 (Saka)
G.S.R. (E).–In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided by a goods transport agency to any person in relation to transport of goods by road in a goods carriage, referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, from so much of the service tax leviable thereon under section 66 of the Finance Act, as is in excess of the amount of service tax calculated on a value equivalent to twenty five per cent. of the gross amount charged by the goods transport agency for providing the said taxable service.
2. This notification shall come into force on the 1st day of March, 2008.
It means now we have to pay 25% service tax on transport service & we can claim also it as input. Whether I am correct or not. Please answer asap.
manmeet singh arora
(Expert) 04 March 2008
DEAR SIR,
AS PER AS NEW NOTIFICATION READS U/S66 OF THE FINANCE ACT THAT EXCESS OF THE AMOUNT OF SERVICE TAX CALCULATED ON A VALUE EQUIVALENT TO 25% OF THE GROSS TOTAL AMOUNT CHARGED BY THE GOODS TRANSPORT AGENCY FOR PROVIDING THE SAID TAXABLE SERVICE.
1. THE INTERPRETATION RIGHTLY CONVEYS THE MEANING THAT 25% SERVICE TAX ON TRANSPORT SERVICE HAS TO BE PAID AND ALSO INPUT CAN BE CLAIMED.
Rajesh Kumar
(Expert) 08 March 2008
You are correct Mr. Bansal. You can pay 25% of the tax and claim Cenvat Credit of that if the Goods Transport Sevice, on which you have paid tax is an input service. The only problem in this area is that service tax paid on outward transport, transport of goods after clearance from factory is not cenvatable.
Such credit facility was also there in the past. However, to claim the exemption notification, it was to be ensured that transporter has not claim cenvat benefit- which was impossible to prove by the tax payer as in this case service provider and service tax payer were different persons. That is why in this budget, the exemption has been made unconditional.
The definition of input service has also been amended in this budget, and GTA service tax is cenvatable for transportation only till the place of removal. Place of removal has been defined in the Section 4 of the Central Excise Act.
