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St on detention charges

29 November 2011

Hi.... I want to know that whether ST should b attract on detention charges charged by transporter .Can we call seperate invoice for detention charges ....

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6 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 29 November 2011

detention is the charges for stationary use of transport / nonmovement of transport vehicle while your goods are loaded on the vehicle, hence its covered under GTA services.

Ganesh (CA) (111 Points)
Replied 30 November 2011

Dear Nitesh,

Detention charges is in the nature of penalty for extended holding period of the goods. This is not a service provided by the Transporter. Hence, this amount will not be liable for service tax. Please also go through the following circular.

Detention charges — Container detention charges not liable to Service tax

Circular No. 121/2/2010-S.T., dated 26-4-2010

F.No. 332/29/2009-TRU

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject : Service tax on Container Detention Charges - Regarding.

Generally marine containers are temporarily brought into a customs territory and have to be re-exported within a specified period. Normally, a Full Container Load is taken out of the port and the activity of stuffing or de-stuffing takes place at the premises of the exporter/importer. The shipping companies/steamer agent provide a pre-determined period within which the container (that has gone out of the port) is to be returned. This is called as ‘pre-holding period’ and the duration of the same is mentioned in the contract. In case there is any delay on the part of the customer in returning the container, the charges known as ‘detention charges’ are collected over and above the contracted amount by the shipping line.

3. Representations have been received in the Board that service tax has been demanded on such ‘detention charges’ under the ‘Business Support Service (BSS)’ or ‘Business Auxiliary Service (BAS)’.

4. The issue has been examined. To retain the container beyond the pre-holding period is neither a service provided on behalf of the client (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as ‘penal rent’ for retaining the containers beyond the pre-determined period. Therefore, the amount collected as ‘detention charges’ is not chargeable to service tax.

5. The Board desires that pending cases, if any, on this issue may be decided in line with the above clarification.

Thanks,

Ganesh

Nitesh khandelwal (M.Com) (35 Points)
Replied 30 November 2011

tnxx Ganesh.....but can we apply such circular in normal GTA cases ? as this circular relates to container Detention (as in case of Import). can u specify any such case law which specifically relate to GTA case.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 01 December 2011

GTA provides a service in relation to transportation of goods by road

which is a single composite service. GTA also issues consignment note. The

composite service may include various intermediate and ancillary services provided

in relation to the principal service of the road transport of goods. Such intermediate

and ancillary services may include services loading/ unloading, packing/ unpacking,

transshipment, temporary warehousing etc., which are provided in the course of

transportation by road. These services are not provided as independent activities but

are the means for successful provision of the principal service, namely, the

transportation of goods by road. The contention that a single composite service

should not be broken into its components and classified as separate services is a

well-accepted principle of classification.

https://www.servicetax.gov.in/st-profiles-home.htm

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 01 December 2011

@ Ganesh

detention in case of GTA incurs when the carrige is detained in process of loading or unloading more than usual time allowed by transporter, and after complete unloading the responsibility of transporter ceases, so the goods are under transit on "carrige" during the detention period.

container rent is seperate issue when its offloaded from the vessle or carrige, so here the clause of panel rent incurs, but in case of transport by road, rent is inapplicable unless the goods are offloaded at destination by the GTA.