QUESTION

A's client is registered with Service Tax , Now in GST. IN GTA (BY ROAD). He was received notice in Service tax regarding(2016-17) difference between Income tax return & Service tax return. Regarding the same, P&L for explanation is submitted. The client is in transporat business as Booking agent. In books of account there is Expenses head In Expenses site Transportation Exps. In that head they booked expenses, which is paid for Expenses during transportation to Truck driver or Transporter in cash(Daily Rs.35000/-) and bank. Another head is Professional Fess. The officer is asking for paying RCM against this expenses. The client has already paid all the service tax which he received. But now they are asking for Paying RCM. Provide solution for this.

ANSWER

Facts of the case:

Mr. A’s client is registered with Service Tax , Now in GST. IN GTA (BY ROAD) He was received notice in Service tax regarding(2016-17) difference between Income tax return & Service tax return. Regarding the same the P&L for explanation is submitted. The client is in transport business as a Booking agent. In books of accounts there is an Expenses head. In Expenses site Transportation Exps. In that head they booked expenses, which is paid for Expenses during transportation to Truck driver or Transporter in cash (Daily Rs.35000/-)and bank. Another head is Professional Fees. The officer is asking for RCM against this expenses. The client has already paid all the service tax which he received. But now they are asking for Paying RCM. Provide solution for the same.

REPLY:

1. In service tax, GTA was subjected to RCM vide Notification No. 30/2012-ST Dated 20/06/2012

You are engaged in transport services and paying expenses to your staff (driver etc) for daily expenses. This amount is used by them for day to day expenses in relation to performance of their job. The amount paid is allowed in Income tax as an expense.
The expenses borne by you cannot be considered as consideration given for receiving GTA services.

GTA is defined in service tax as follows:

As per 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.

Since you are paying expenses to your staff and not to the person providing GTA services to you, therefore, it is not subjected to RCM. (Reply dt. 21/09/2021)