Service tax on freight by c&f agent
This query is : Open
18 September 2012
Query on Service Tax
Dear Sir,
I have a query in reference to my C& F Agent’s Service Tax.
My client is a C&F Agent of ABC Limited for Gujarat State.
Being C&F, my client pays freight which is reimbursed by ABC Limited.
As ABC Limited pays Service Tax on Reverse Charge basis, my client C&F agent is not required to pay Service Tax. But recently, service tax authorities under pre-audit instructed us to prove that ABC limited is paying Service Tax on reimbursed freight or not. ABC Limited gave an undertaking letter to my client C&F agent regarding their payment of service tax on freight.
The big issue for us is that ABC limited has several C&F agents for different states and it would be very difficult for them to appear before ST authority here in Gujarat and prove their payments in relation to Gujarat C&F Freight reimbursement.
The ST Authority has told us that if we are not able to prove about ABC Limited’s payment, the whole ST liability would come to my client C&F Agent.
Please suggest some solutions as to how to satisfy the ST authority.
Regards
Bhargav
Dear Sir,
I have a query in reference to my C& F Agent’s Service Tax.
My client is a C&F Agent of ABC Limited for Gujarat State.
Being C&F, my client pays freight which is reimbursed by ABC Limited.
As ABC Limited pays Service Tax on Reverse Charge basis, my client C&F agent is not required to pay Service Tax. But recently, service tax authorities under pre-audit instructed us to prove that ABC limited is paying Service Tax on reimbursed freight or not. ABC Limited gave an undertaking letter to my client C&F agent regarding their payment of service tax on freight.
The big issue for us is that ABC limited has several C&F agents for different states and it would be very difficult for them to appear before ST authority here in Gujarat and prove their payments in relation to Gujarat C&F Freight reimbursement.
The ST Authority has told us that if we are not able to prove about ABC Limited’s payment, the whole ST liability would come to my client C&F Agent.
Please suggest some solutions as to how to satisfy the ST authority.
Regards
Bhargav
18 September 2012
Since ABC Limited has different area of operations, they must have the centralised registration, please collect ABC Ltd centralised registration certificate and their returns copy of the previous period. if more support is required they may send the challans copy of the period relevant to your c&f services with your ledger copy.
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18 September 2012
Krishnansir,
Thank you for your prompt reply.
Regards,
Bhargav
Thank you for your prompt reply.
Regards,
Bhargav
19 September 2012
Dear Bhargav,
Since your client is paying freight to the GTA, therefore it should also pay service tax on reverse charge basis. payment of ST by ABC limited will not stand valid in law. however, for the earlier period you may reconcile the ST payment with the challans along with detail working for ST liability may be produced. C&F's account may also be produced to reconcile the freight reimbursed amount.
Since your client is paying freight to the GTA, therefore it should also pay service tax on reverse charge basis. payment of ST by ABC limited will not stand valid in law. however, for the earlier period you may reconcile the ST payment with the challans along with detail working for ST liability may be produced. C&F's account may also be produced to reconcile the freight reimbursed amount.
19 September 2012
VikashSir,
Thanks for reply.
C&F Agent is only paying on pure agent basis.
And when service receiver pays himself or through agent, service receiver is only liable to ST payment on reverse charge.
Please express your views.
Thanks for reply.
C&F Agent is only paying on pure agent basis.
And when service receiver pays himself or through agent, service receiver is only liable to ST payment on reverse charge.
Please express your views.
19 September 2012
In case C&F agent is pure agent, then payment by ABC Ltd may stand ok, but then also you need to get the payment for the ST validated with the reimbursed amount and ST payment through challan & your ledger at ABC limited.
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