Goods Transport Agency — (GTA) Service

3. Goods Transport Agency — (GTA) Service :

Hitherto, recipient of service of a goods transport agency
paying service tax on 25% of the value of transport freight, faced difficulty in
claiming abatement of 25% without producing evidence of ful-filment of
conditions of non-availment of CENVAT credit and/or non-utilisation of benefit
under Notification No. 12/2003-ST. The evidence was presented by obtaining a
declaration from each GTA as to fulfilment of the above conditions. Collection
and maintenance of such declarations and presenting to the Department was found
to be a difficult exercise. Further, for the field formations also, it was
cumbersome to verify the required declarations in order to satisfy the
conditions laid down under the Notification. To free the abatement provision for
GTA from the conditions laid down under Notification No. 1/2006-ST, a separate
Notification No. 13/2008-ST has been issued. However, simultaneously, definition
of the term ‘output service’ is amended in the CENVAT Credit Rules, 2004 (CCR)
to exclude GTA service therefrom. Thus, no CENVAT credit can be availed by a GTA
service provider. It may be noted at this point that consequentially, the
Government has missed omitting sub-clause (zzp) of clause (105) relating to
goods transport agency from the definition of ‘capital goods’ in Rule 2(a)(B) of
the CCR. Nevertheless, receiver of service of GTA paying service tax at an
effective abated rate of 3.09% can claim CENVAT credit of service tax paid on
GTA service, if the same is ‘input service’ for the purposes of CENVAT Credit
Rules, 2004 of service tax paid on GTA service.