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Service Tax on Transportation, Service Tax

Issue Id: - 117562
Dated: 11-10-2021
By:- Ayub Mohammad
Service Tax on Transportation

  • Contents

A is a goods seller. Buyers requested for the goods to be transported to buyers place at his cost. Seller arranged transport of goods, paid on behalf of the buyer and collected the money from buyer. If this is pure agent's service or service tax is applicable on such transaction? If applicable, then for which part of service (i.e, providing transporting service to buyer or on RCM for getting transported the goods by truck owners)? This is the questione for F Y 2016-17 & 2017-18.

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1 Dated: 11-10-2021

Such transaction does not conform to the definition of 'pure agent' as per Service Tax Determination Valuation Rules. In this scenario, the concept of 'pure agent' does not come into picture.In simple words, a person who actually bears the amount of freight for transportation of goods by road will pay service tax under RCM. In your example, here the buyers have actually borne the amount of freight and so the buyers will pay ST and not seller A.

2 Dated: 13-10-2021
By:- RAMASWAMY Advocate

In my view, A separate bill has to be raised by the seller indicating the freight amount and the buyer has to pay the service tax on Reverse Charge Mechanism method.

3 Dated: 13-10-2021


Your view is right. Preference-wise Service Tax on GTA is payable as under:

1.Consignor A (seller)

2. Consignee B (buyer)


Here Consignor has paid on behalf of the buyer B. So B is liable to pay ST on the amount freight. Otherwise either Consignor or consignee can pay ST.


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