Abatement on ocean freight

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This query is : Resolved

CA Ajit Gajera (Querist)

12 April 2018 Hello Dear Friends,
I am CA Ajit Gajera, I have one client doing business of Freight Forwarders. Now we have department audit for last 5 years. Last 4 years have no problem at all because Freight was exempt.
From 01/06/2016 Ocean Freight was taxable and it was clearly stated that Abatement of 70% was allowed on freight services.
My client was taking 70% abatement and paying tax accordingly. Now officer is a view that as per Circular no 206/4/2017 - Service tax dated 13/04/2017, Your firm is not eligible for 70% Abatement and now you have to pay balance tax on 70% value of Freight.
Can anybody has a view that this abatement is available or not.

Please reply urgently

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

12 April 2018 Abatement is available only exemption is not available as stated below.
The condition for availing exemption under notification No. 26/2012-ST dated
20.06.2012 (Sl. No. 10) is not fulfilled by the foreign shipping lines. Hence, benefit of
conditional exemption will not be available to them and service tax will be paid on full valueof services.
Service tax payable only on 30% of freight value.
Wrong interpretation.

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