Seeking to allay fears of traders who have threatened to go on a nationwide strike opposing the service tax, the government on Tuesday said the liability to pay the tax is on goods transport agencies.
"Apprehensions of traders are misplaced. Primarily, the liability to pay the service tax is on the goods transport agencies," the finance ministry said in a statement.
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A section of the trading community, led by Confederation of All India Traders, have threatened to go on a strike against the requirement of traders to pay service tax, which is primarily levied on goods transport agencies.
However, a person would have to pay the tax if the consignor or the consignee falls under one of the following seven categories.
These are -- factory registered under or governed by the Factories Act or company established by or under the Companies Act or corporation established by or under any law or society registered under Societies Registration Act or similar law or co-operative society established by or under any law or dealer of excisable goods, registered under the Central Excise Law or any body, corporate established or a partnership firm registered by or under any law.
Therefore, unless a trader falls under one of the categories, he is not liable to pay the service tax.
A trader sending goods to another trader or any entity outside the above seven categories would not be liable to pay service tax, even if the freight is paid by him.
The present dispensation is similar to the method of collection of service tax prescribed in 1997 on goods transport operators.
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