Service tax applicability
This query is : Resolved
06 July 2015
Dear Experts
Our Company engaged in a business of commission on Air freight (We collect the Perishable items from various part of the market in one city Ex., Bangalore and Forward these items to Other city Ex., Delhi to the actual Buyers of this goods where this buyers not directly connected with Freight Forwarders) Here we just act as a Commission Agents. When we dispatch the item to Freight Forwarders they raise AirWay Bill in the name of Buyer or Consignee located in Delhi. But they Bill/Invoice to us fortnightly on our Company Name. daily when we receive Airway Bill, we i.e., our Company raised the invoice to buyer or Consignee located in Delhi showing the details of Actual Freight Charges as Reimbursement Expenditure which is collected from buyer or consignee located in Delhi & Separately showing the commission on the invoice. Here we are not collecting service tax on Reimbursement Expenditure but collecting Service Tax on Commission only
We have doubt about service tax on reimbursement expenditure of above transaction which is allowable or not. If it is allowable then no need to pay service tax on freight charges? Please clarify.
Our Company engaged in a business of commission on Air freight (We collect the Perishable items from various part of the market in one city Ex., Bangalore and Forward these items to Other city Ex., Delhi to the actual Buyers of this goods where this buyers not directly connected with Freight Forwarders) Here we just act as a Commission Agents. When we dispatch the item to Freight Forwarders they raise AirWay Bill in the name of Buyer or Consignee located in Delhi. But they Bill/Invoice to us fortnightly on our Company Name. daily when we receive Airway Bill, we i.e., our Company raised the invoice to buyer or Consignee located in Delhi showing the details of Actual Freight Charges as Reimbursement Expenditure which is collected from buyer or consignee located in Delhi & Separately showing the commission on the invoice. Here we are not collecting service tax on Reimbursement Expenditure but collecting Service Tax on Commission only
We have doubt about service tax on reimbursement expenditure of above transaction which is allowable or not. If it is allowable then no need to pay service tax on freight charges? Please clarify.
06 July 2015
As per recent amendment service tax payable on reimbursements. You can claim cenvat credit on service tax paid on air freight.
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