A short study on the current Status of service tax relating to goods transport agency and their liability to pay said taxes.

1. Service Tax on Goods
Transport Agency: Person Who
is Liable to Pay Service Tax
AUGUST 16, 2016
Ankush Chattopadhyay (13LLB011)
VIIIth Semester, School of Law, North Cap University

2. Service Tax on Goods Transport from 1.7.2012
The service tax is on “Goods transport Agency” and “courier service” only. Goods transport
freight for single consignee up to Rs.750 and for single vehicle up to Rs.1500 is exempt.
Goods transport Agency has been defined as “any person who provides service in relation to
transport of goods by road and issues consignment note by whatever name called.” [Section
65(50b) of Finance Act, 1994]
Service tax has to be paid only on 25% of the gross amount paid to the Goods Transport
Agency. For gross amount, octroi is not taken in account. The tax is payable on reverse
charge basis by consignor or consignee who ever pays the freight, if the consignor or the
consignee is factory, registered society, co-operative society, registered dealer, body
corporate, partnership firm, LLP and association of persons.
If the goods transport agency has charged service tax then no service tax is payable
by consignor or consignee.
Service Tax on Goods Transport Legal provisions.
Negative List of Services (section 66D)
P. Services by way of transportation of Goods-
1) By road except the services of-
(A)A goods transportation agency; or
(B) A courier agency;
Exempted Services Notification No.25/2012 STdated 20.6.2012w.e.f 1.07.2012
21. Transport of Specified goods by Road
Under this entry, exemption has been granted to services 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 on a consignment transported in a single
goods carriage does not exceed one thousand five hundred rupees; or
(c) Goods, where gross amount charged for transportation of all such goods for a
single consignee in the goods carriage does not exceed rupees seven hundred fifty;
Similar exemptions existed earlier vide Notification No.34/2004-ST dated 3.12.2004 as
amended by Notification No.4/2010-ST dated 27.02.2010 and Notification No.34/2004-
ST dated 3.12.2004 (since rescinded)
Also, transport of goods by road by goods transport agency also enjoys an abatement @
75 per cent vide Notification No.26/2012-ST dated 20.6.2012 (earlier Notification

3. No.1/2006-ST).
New Scheme of Taxation of Services
According to section 65(50b), goods transport agency means any person who provides
service in relation to transport of goods by road and issues consignment note, by whatever
name called.
Therefore, goods transport agency may be ---
 Any person who provides services in relation to transport of goods by road, and
 Issues consignment note, by whatever name called.
Goods transport Agency should meet the following tests –
(a) It should be any person
(b) It should provide service in relation to transport of goods
(c) Such transportation should be by road
(d) Agency should book the goods for transport
(e) It must issue a consignment note (or such document called by any other name)
against the goods so booked and transported.
Abatement in Service Tax (NotificationNo.26/2012ST) effective from 1.7.2012.
Description of taxable service Taxable % of
gross freight
Conditions
Services of goods transport
agency in relation to
transportation of goods.
25 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.
PAYMENT OF SERVICE TAX UNDER
REVISED REVERSE CHARGE METHOD
SECTION 66B, 68(2) AND RULE 2(1)(D)
Taxable services Person liable to pay and extent
Service provider Service Receiver
Goods transport
Agency services
Goods Transport Agent Consignor or consignee being
factory, registered society Co-
operative society. Registered Dealer.
Body corporate, Partnerships firm,
LLP and Association of persons.

4. Rule 4B of Service Tax Rules 1994 defines "consignment
note means a document issued by a goods transport agency
against the receipt of goods for the purpose of transport
of goods by road in a goods carriage, which is serially
numbered, and contains the name of the consignor and
consignee, registration number of the goods carriage in
which the goods are transported, details of the goods
transported, details of the place of origin and
destination, person liable for paying service tax whether
consignor, consignee or the goods transport agency."
In Reverse Charge Mechanism Service Receiver is made
liable to pay service tax and comply with other
provisions of Finance Act, 1994. Further the scope of
Reverse Charge Mechanism was extended vide Notification
no.-07/2015 and now persons other than service receiver
and service providers are also made liable to comply with
Finance Act, 1994 provisions.
Section 66D of Finance Act, 1994 inserted by Finance Act,
2012 effective from 1st July 2012.