Rule 10 – Place of provision of goods transportation services :

The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods.

However, the place of provision of services of goods transportation agency shall be the location of the person liable to pay tax.

Analysis of the rule: This rule covers the service of transportation of goods, by any mode of transport (air, vessel, rail or by a goods transportation agency). However, it does not cover the transportation of goods by courier or mail.

For instance, a consignment of polished diamonds is consigned from Mumbai to New Jersey. The place of provision of goods transportation service will be New Jersey (outside India, hence not liable to service tax). Conversely, if a consignment of glassware is consigned from New York to Chennai, the place of provision will be Chennai.

Exception to the rule: Rule 2(1)(d) of Service Tax Rules, 1994 provides that where a service of transportation of goods is provided by a “goods transportation agency‟, and the consignor or consignee is covered under any of the specified categories prescribed therein, the person liable to pay tax is the person who pays, or is liable to pay f reight (either himself or through his agent) for the transportation of goods by road in a goods carriage. The place of provision of services of goods transportation agency shall be the location of the person liable to pay tax.

Person liable to pay tax shall mean the person liable to pay service tax under section 68 of the Act or under rule 2(1)(d) of the Service Tax Rules, 1994 [Rule 2(m)].For instance, a goods transportation agency ABC located in Delhi transports a consignment of new motorcycles from the factory of XYZ in Gurgaon (Haryana), to the premises of a dealer in Bhopal, Madhya Pradesh. XYZ is a registered assessee and is also the person liable to pay freight and hence person liable to pay tax, in this case. Here, the place of provision of the service of transportation of goods will be the location of XYZ i.e. Haryana.