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Service tax on Air freight recovered by freight & forwarder

This query is : Resolved 

Dear Sir/Madam

my query is:

If a Freight and forwarder provides pickup, clearing & freight service (from/to india) to client and recover the same thru his invoice.

If the entire sum recovered on account of freight is transferred to holding company abroad.

is the same liable to service tax

kindly advice


Dear Rshma,

Kindly specify the transaction with exact details as I think domestic and import/export is getting mixed up

Please site an example for addressing your enquiry


1.What is the transaction?
2.What is the significance of this transfer?
3. Holding company of the provider of services?

Originally in respect of all services any receipt in convertible foreign exchange was exempted from ST. However, the said exemption has been withdrawn and The Export of Service Rules 2005 has been introduced w.e.f 15.03.2005.
The Rules divide the service into 3 categories and consider services as export of services subject to certain conditions:
1) Taxable services is said to be exported if the immovable property is situated outside India.
2) Service is exported when the services are performed outside India. Part performance outside India is also permitted.
3) whether or not performed outside India shall be treated as taxable service performed outside India.
C&F Agent is coming under the 2 point.

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