Service tax on sale of service to exporter

This query is : Resolved

Guest

Guest (Querist)

21 September 2013 Dear Sir

A is a cargo carrier company. It is providing cargo handling service to an exporter company B (exporter also is a cargo handling service provider) within India only. Is there any abatement on service tax which is to be charged by A from B.
In my case A is charging service tax @ 3.09%. Is it correct. Please give some legal support for the answer.

Please reply as soon as possible.

Guest

Guest (Querist)

22 September 2013 somebody please reply.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Got it! Here’s the breakdown for your query on **service tax on cargo handling services provided to an exporter within India**:

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### Key points:

* Cargo handling services fall under **“Goods Transport Agency (GTA)”** or related services depending on specifics.
* For exporters, **service tax is exempt on services directly related to export** of goods (like customs clearance, cargo handling related to export).
* However, the exemption applies **only if the service is provided for export of goods out of India**.
* If service is provided *within India* and the service receiver is an exporter but the service itself is not directly linked to export, normal service tax applies.
* Regarding abatement (i.e., reduced taxable value), certain services like GTA get abatement (like 70% abatement so tax charged only on 30% of value).

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### About the 3.09% service tax rate:

* This was the effective service tax rate during some period when the **service tax rate was 12.36%** including education cess etc.
* Abatement on GTA services was 70%, so taxable value = 30% of gross amount.
* Therefore, **service tax = 12.36% × 30% = approx 3.71%** on gross value.
* If your rate is 3.09%, that might be due to a different cess rate or a lower service tax rate at that time.

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### Legal references:

* Notification No. 26/2012-ST dated 20 June 2012 — provides exemption to services related to export of goods.
* Notification No. 30/2012-ST dated 20 June 2012 — specifies abatement on GTA services.
* Section 66B of Finance Act, 1994 — levy of service tax.
* Relevant CBEC circulars clarifying abatement and exemption for exporters.

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### Summary:

* If cargo handling service is directly for export, **exempt from service tax**.
* If not directly related to export, service tax applies with **abatement (usually 70%)**.
* The rate of \~3.09% is roughly consistent with abatement on 12.36% tax rate.

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If you want, I can help you draft the exact calculation or share the notification text. Would you like that?

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