Service Tax

This query is : Resolved

CA. Mala Rohara (Querist)
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19 April 2009 If co. purchase goods and invoice is in such manner:

Particular Qty. Rate Value
Item 7000 100 700000
Add: Vat @ 4% 28000
Less: Freight 3000
_______
725000
_______
And Purchasing co. pays freight of Rs. 3000/- to transport agency on behalf of Selling Co(Consignor).
Now please tell me who is liable to pay service tax on freight.

Dayal

Dayal (Expert)
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19 April 2009 The provisions are very clear in this aspect, it is basically a commercial decision between you and the consignee.

The provisions states that service tax is to be paid either by the consignor or consignee.

Since the Freight is not recovered from the consignee and he is paying the freight, he is liable to pay service tax

If the consignee does not pay then you as consignor are liable to pay

Dayal

Dayal (Expert)
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19 April 2009 does this clear your doubt, if not do let us know

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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20 April 2009 The provision talks of paid by the consignor/ consignee or on his behalf. In this transaction, the consignor is required to pay but asks the consignee to pay on his behalf.
The ST is liable to be paid by the consignor in my view. In his books also the consignor will book sales of 725,000 and freight of Rs.3000/- as expense. In the consignees books the frieght will be a set off account with balance = 0.

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