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CA. Mala Rohara (Querist)
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14 October 2009 A co. is taking services of transport agent and transport agent is making invoices in following manner:

Weight Rate Amount
20 1200 24,000/-

it is mentioned in transporter's invoice that service tax is paid by consignee.

It is mutually decided by both parties that service tax will be paid by consignee but amount of service tax will be deducted from transporter's amount.

Now Company is making payment to transporter in this way:

Amount 24,000
Less: Service Tax (618)(24,000*25%*10.3%) --------
23,382/-
-------

(Service Tax is calculated only on 25% value due to availing exemption notification).

Is service tax calculation correct?

Dayal

Dayal (Expert)
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15 October 2009 For all purposes your liability as a consignee will be Rs. 618 as this is the bill amount.

Your arrangement with the transporter will not have any impact on the transportation charges paid.

You may pay Rs. 23382 but service tax will be calculated on the gross amount charged, this is for the reason that under mutual understanding the amount is being deducted from his bills.

Therefore the service tax calculation is absolutely correct as per the provisions of the act.

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