Service Tax – Government exempts supply of transport vehicles to GTA
In this year's budget, services provided in relation to supply of tangible goods for use, without transfer of possession and effective control, has been made as separate taxable service and this service has come into force w.e.f. 16.05.2008. Consequently, supply of goods carriage to the GTA , without transfer of possession and effective control, for using the goods carriage for transport of goods by road becomes leviable to service tax.
Representations have been received from the All India Confederation of Goods Vehicle Owners' Associations and also from the All India Motor Transport Congress requesting to provide relief on account of levy of service tax on supply of goods carriage to GTA for use in transport of goods. It has been stated that GTAs often provide services in relation to transportation of goods by road using the goods carriage obtained on rent or hire basis. The relief has been sought on various grounds inter alia that the service tax paid on renting / hiring of goods carriage, without right of possession and effective control, could not be taken as input credit for payment of service tax towards GTA service.
Normally the Government is quick to react to representations from the Transport sector, for they can literally take to the roads.
So the Government has exempted the taxable service of supply of a goods carriage, without transferring right of possession and effective control of such goods carriage, referred to in sub-clause (zzzzj) of clause (105) of section 65 of the Finance Act, provided by any person to a goods transport agency for use by the said goods transport agency to provide any service, referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, to a customer in relation to transport of goods by road in the said goods carriage, from the whole of the service tax leviable thereon under section 66 of the Finance Act.
The exemption is applicable from 26.06.2008, but the levy was from 16.05.2008. Now what about the forty days when there was no exemption? Government will give a retrospective exemption after about five years and protracted litigation!
Notification No. Dated: June 26, 2008