Service tax liability on freight

This query is : Resolved

Share Report Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

19 March 2012 Sir,
Please clarify SERVICE TAX LIABILITY ON FREIGHT paid by a Private Limited Company.

GSTP Hari Dhayalan Konar

GSTP Hari Dhayalan Konar (Expert)
Follow

19 March 2012 there is no service tax liability on freight. freight charges are exempted.

Querist : Anonymous

Querist : Anonymous (Querist)

19 March 2012 Respected Sir,
MY SINCERE THANKS FOR YOUR EXPLENATION.
The service tax authority (at manjeri,malappuram,kerala) says that , in the case of freight paid by a company ,the service tax is to be paid the company and not by the transporter or the consigner.I am once again requesting to resolve my query.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

24 July 2025 Got it, this is a classic confusion around **service tax on freight charges**. Let me clarify clearly:

---

### Service Tax on Freight — Who is liable?

* **Basic Rule:**
Service tax is **not charged on freight charges if the freight is for transportation of goods by road** except for certain specified cases.

* **Exemption:**
As per **Notification No. 30/2012-ST**, freight for transportation of goods by road is **exempt from service tax** if provided by a transporter registered with the Central Motor Vehicles Act.

* **When is Service Tax Payable?**
Service tax is applicable on **“Transport of Goods by Road Service”** only when the transporter is **unregistered** or in cases of **reverse charge** where recipient is liable.

---

### Who pays service tax if applicable?

* If freight service is taxable, under **Reverse Charge Mechanism (RCM)**, the **recipient of service (i.e., the company paying freight)** is liable to pay service tax, not the transporter.

* This explains why your local service tax authority says the company (freight payer) has to pay service tax under RCM.

---

### Summary Table:

| Scenario | Service Tax Liability | Who Pays? |
| ------------------------------------------ | ------------------------------------------- | ---------------------------------- |
| Freight by registered transporter (road) | Exempt | No service tax payable |
| Freight by unregistered transporter (road) | Taxable under RCM | Recipient (company paying freight) |
| Freight by other modes (rail, air, sea) | Taxable (transport of goods by other means) | Service provider |

---

### Important Points:

* Confirm whether the transporter is **registered and authorized** under the Motor Vehicles Act.
* If yes, then freight charges are exempt, and no service tax liability for company.
* If no, company must pay service tax under reverse charge.

---

If you want, I can help you prepare a note or communicate with your local tax officer to resolve this matter officially. Would that help?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now