Service tax on freight charges paid by a company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2011 Sir,

One of my client is a Manufacturing company has paid freight charges. The Company is also registered under Service TAx. The GTA has collected service tax on the freight charges.

My quiry is whether the company is liable to pay service tax on the freight charges on which the GTA has already collected service tax.

Whether the company can claim input credit on service taxes paid on other charges such as on courier service etc.,

Kindly clarify.

Thanking you in advance

Yours truly

P. Srinivasa

CA Sunil Anwani

CA Sunil Anwani (Expert)
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25 November 2011 The company has not to pay on the freight charges on which GTA has already collected.

Company cannot clain any input credit on Service tax paid if they are claiming the abatement.

Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2011 Thanks for the immediate reply. Whether the company has to file the Servie tax return. Whether the fregith charges paid should be shown as Gross turnover and claim the same amount as exempt turnover since the service tax has already been paid to the GTA.

Kinldy clarify

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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24 July 2025 Here’s a detailed reply to your query about **service tax on freight charges paid by a company**:

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### ✅ **1. Is the company liable to pay service tax if the GTA has already collected it?**

**No**, if the **Goods Transport Agency (GTA)** has **charged and paid the service tax**, then **your company is not liable** to pay it again under **Reverse Charge Mechanism (RCM)**.

* Under **Rule 2(d)(v)** of the Service Tax Rules, 1994, the recipient (like a manufacturing company) becomes liable to pay service tax **only if the GTA has not charged it** and the freight is paid by the recipient.
* If **GTA issues an invoice with service tax**, then **it is the GTA's responsibility** to pay that tax to the government.

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### ✅ **2. Can the company claim CENVAT credit on service tax paid on freight?**

* **Yes, CENVAT credit can be claimed** only **if**:

* The **GTA does not claim abatement**, i.e. full tax is paid.
* The service is used **for providing output services** or **used in or in relation to manufacturing**.
* However, if the **GTA avails abatement** (generally 70% or 75%), then **credit of service tax paid is not available**, as per **Notification No. 26/2012-ST** (or earlier notifications before that, depending on the period).

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### ✅ **3. Can the company claim input credit on courier service etc.?**

**Yes**, the company can claim **CENVAT credit** on input services like:

* Courier charges
* Telephone expenses
* Security services
* Professional services, etc.

**Condition:** The services must be **used for providing output services** or for **manufacturing activities**, and proper **service tax invoice** should be available.

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### ✅ **4. Should the company show freight in its Service Tax return?**

* If your company is **not paying service tax** under reverse charge (because GTA already paid it), then:

* **No need to include freight** in taxable value in ST-3 return.
* However, for transparency, you may show it under **“Exempted/Non-taxable services”** or **information-only column** if you wish to reflect total service input.

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### ✅ **Summary:**

| Question | Answer |
| --------------------------------------------------------- | --------------------------------------- |
| Is company liable to pay ST on freight if GTA charged it? | ❌ No |
| Can company claim credit on freight ST? | ✅ Yes, **only if** no abatement claimed |
| Can company claim input credit on courier etc.? | ✅ Yes |
| Should freight be shown in ST-3 return? | ❌ Not mandatory, unless under RCM |

Let me know if you need help with **how to fill ST-3 return** or **track abatement status** of a GTA invoice.

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