Service tax on reimbursement of transporting charges

Queries 650 views 3 replies

Milan Agrawal

Chartered Accountant

207 Points Posted on 03 November 2014

Dear All,

Greeting,

Kindly give your valuable opinion on the following issue:

A proprietorship firm, say X, sales material from his place to respective buyers(usually companies) in which he incurs transporting charges. The transporter raise the bill in the name of the X on which X deposits the service tax on reverse charge mechanism. Now, X has to reimburse this transporting charges along with some profit from his respective buyers i.e. suppose he received transporting bill of Rs. 100.00 from the transporter, he reimburses Rs. 105.00 from the buyers.

My query is,

1. What is the best possible way to give effect to the above transaction whether he should raise transporting bill on the buyer(although he is not a transporter) or should raise debit note or any other way?

2. What will be the impact of service tax in the above transaction under both the circumstances or in any other circumstances, if any?

Regards,

CA Milan Agrawal

+919778459609

Replies (3)

CA Ashish K Bansal

partner

175 Points Posted on 04 November 2014

Reverse charge is not applicable on proprietors ship firm

CA Ashish K Bansal

partner

175 Points Posted on 04 November 2014

Service tax on transport can be charge only by person who issues consignment note .for raia8ng a transport bill you would have to issue consignment not get registered as gta in service tax but in that case dont pay service tax on reverse charge as it is not aaplicable on proprietor ship firm

DEEPAK

STUDY

70 Points Posted on 04 November 2014

Dear sir:- 1. No ST payable if no consignment note is issued GTA. 2. In case, consignment note is issued, X may be liable if his proprietorship firm is a factory. 3. Best way to show the trasport charges in the excise invoice and pay excise duty on value of material including freight. The duty on freight is available as cenvat to buyer so no loss to him. 4. The difference between freight collected from buyers and paid to transporter may be liable to service tax under BAS or other taxable service.