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Adil (Querist)
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22 September 2010 I have a courier company in USA, lets call it "ABC". We have customers in the USA who ship goods to India. We have a Private limited firm in India that has takes up the job of customs clearance and last leg delivery. Lets Call it XYZ.

ABC collects all charges including customs duty from its customers in USA.

XYZ bills ABC for the customs duty paid in USD (INR amount paid to goverment is converted to USD at current market rate). Is any tax applicable on customs duty collected ?

XYZ bills ABC for customs clearance charges in USD. The customs clearance is done by a local company in India who bills XYZ with a service tax component in its invoice in INR. Does XYZ have to again pay service tax on amount collected by it from ABC in USD ?

XYZ bills ABC for last leg delivery in USD. The last leg is taken care of by top companies in India who bill XYZ with a service tax component in their invoice. Does XYZ again have to pay service tax on the ammount collected by it from ABC in USD ?

If XYZ offers the same service to a local company in India , Then does it have to pay service tax ?

This is so confusing , I have not received a satisfying answer from any expert that i have spoken, I hope to get some attention here.

thank you all in advance.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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22 September 2010 Q. XYZ bills ABC for the customs duty paid in USD (INR amount paid to goverment is converted to USD at current market rate). Is any tax applicable on customs duty collected ?

A. No service tax is chargeable on custom duty payment on behalf of customer of ABC co, since XYZ is depositing the custom duty as agent of ABC’s customer. {as per service tax ( determination of value) Rules , 2006}

Q. XYZ bills ABC for customs clearance charges in USD. The customs clearance is done by a local company in India who bills XYZ with a service tax component in its invoice in INR. Does XYZ have to again pay service tax on amount collected by it from ABC in USD ?

A. This is a case of export of services, since service is provided from India, but recipient of services outside India. In this case Service tax is not chargeable on the billing to ABC CO.

Q. XYZ bills ABC for last leg delivery in USD. The last leg is taken care of by top companies in India who bill XYZ with a service tax component in their invoice. Does XYZ again have to pay service tax on the amount collected by it from ABC in USD ?

A. No service tax is payable on billing to ABC co, since it is again case of export of services.

Q.If XYZ offers the same service to a local company in India , Then does it have to pay service tax ?

A. Yes , XYZ has to pay service tax on the billing to local company in India.

“ In all the cases , input credit of service tax will be available to XYZ company.

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