Business Daily from THE HINDU group of publications
Monday, Jul 10, 2006
Business Daily from THE HINDU group of publications Monday, Jul 10, 2006 |
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Mentor
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Taxation Logistics - Taxation Columns - At Your Service Transporter identity
An individual brings goods from other parts of India. His transporter, being an individual, does not charge service tax on freight. What is his service tax liability? Bittu Gupta As per Section 65 (105)(zzp) of Finance Act, 1994 service provided to a customer by a `goods transport agency' in relation to transport of goods by road in a goods carriage will attract service tax. In terms of Section 65(50b) of the above Act, `goods transport agency', in turn, is defined as referring to "any commercial concern which provides service in relation to transport of goods by road and issues consignment note by whatever name called." In terms of the Finance Act, 2006, the words "commercial concern which" have been replaced by "person who". Therefore, after the enactment of the Finance Act, 2006, it does not make any difference, if the transporter is a commercial concern or an individual. Services provided by both will attract service tax. Where the consignor or consignee happens to be any one of the following, namely, a factory, a company, a corporation, a society including a cooperative society, a registered dealer of excisable goods, or a partnership firm, the liability to pay service tax will be on the person who pays the freight. Therefore, if you receive the goods from any one of the above entities, then the liability to pay service tax is will be on the person who is paying the freight. If the consignor does not fall under any of these categories, then, the liability to pay the service tax will be on the service provider, that is, the `goods transport agency'. It also may be noted that in terms of service tax Notification 33/2004, there will be exemption if (a) the gross amount charged on consignments transported in a goods carriage does not exceed Rs 1,500; or (b) the gross amount charged on an individual consignment transported in a goods carriage does not exceed Rs 750.
Return the tax paid
An individual renders services to a company but does not charge service tax as his taxable services are below Rs 4 lakh. But the company, while sending payment, adds service tax on billed amount and sends enhanced payment, that is, including the service tax. What should the service provider should do with the tax so received, as otherwise his service tax liability is nil? Bittu Gupta Under law, when service tax is exempted, the service provider cannot charge and collect any service tax. When there is an exemption in force, voluntarily also he cannot pay service tax. Therefore, in this situation, the only option is to return the service tax amount to the company and ask it to reverse the entries.
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S. Murugappan
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