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Service tax for carriage inwards

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 asked

: Im working in partnership firm. Have a query on the carriage inwards whether under reverse charge mechanism are we liable to pay any service tax? if yes what is the percentage? then in certain cases we have LR copies and there they have mentioned ST @ 25% on the base value and claimed us.. in other cases no ST.. and also we didn't have LR (consignment notes) in some cases.. so how do we consider these? Please brief..

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4 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Hello Partnership firm is covered in reverse charge u should get registered and start paying service tax on freight fir which u have c9nsignment note further don’t pay service tax to transporter Yiu can claim abatement of 70persent wef from 01 april 2015

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Open uri20170510 32134 1c996lj?1494421732 answered

Following are the pains experienced by tax payers: 1. The service tax on GTA is on reverse charge mechanism. A charging mechanism where service providers (goods transport agencies) are showing all resistance to comply the law. 2. Without providing any services, a unit could be under the net of service tax just because it pays freight. All manufacturing concern having factories are undergoing this pain. 3. The only service then starts all the residual procedural aspects to be complied i.e. registration, collection, payment and returns. More painful would be when the service ends up unending litigations. 4. Payment of GTA Service effectively is @ 2.575% [(100 Rs. Freight-75% abatement)*10.30%]. However, payment is only required to be made in cash or bank. No CENVAT Credit can be used. 5. While paying the Service Tax on GTA, a bifurcation of inward freight and outward freight requires must as CENVAT Credit on outward freight is questionable at many courts. 6. GTA on inward freight is eligible for CENVAT Credit on the basis of GAR-7 challan. However, the same is nothing but an added cost for tax payers who don’t have any other services on which service tax is paid and so that the said liability can be squared off against CENVAT Credit of service tax paid on inward freight. Most of the manufacturers would be baring these added costs. 7. Additionally, GTA has number of exemptions and refunds apart from nominal levy of 2.575%. Freight amount of Rs. 750 is excluded from Service Tax net and Rs. 1,500/- for more than one consignment. On the other side, exporters are exempted from service tax net under notification 18/2009 dated 07-07-2009. If exporters has paid service tax as input service, the same is refunded through notification 17/2009 dated 07-07-2009. 8. Imagine a worst-cum-worst situation where no service tax on GTA is paid and audit comes at place. Departmental authorities will put tax payer in defaulters for peanuts of service tax and enjoy huge amount of penalties i.e. late registration penalty, interest on late payment, late filling of returns etc. 9. There are silent controversies as well. There is a list of persons liable for GTA service tax if none is there Goods Transport Agency itself is liable to pay tax. The list itself is narrow. Concerns like Trusts, Association of Persons and LLPs are outside the purview. The negative list of services has just been put on floor for comments from all industries and consultants. It would not be wrong to include GTA also at the par of negative list.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

See under reverse charge mechanism for good transport agency service (which includes carriage inward) the consignor or consignee who pay the freight is liable to pay service tax. The percentage of abatement is 70% means you have to pay service tax only on 30% value of the freight bill (As per amendment made in finace act 2015, w.e. 01.04.15) . The important thing for falling any payment under GTA service is that the transporter must issue a consignment note. Also there is some exemption for freight upto Rs.750/- and 1500/-. A partnership firm is also liable to pay if the above condition are fulfilled.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Partnership firm is covered in reverse charge u should get registered and start paying service tax on freight fir which u have c9nsignment note further don’t pay service tax to transporter Yiu can claim abatement of 70persent wef from 01 april 2015

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