ST on Freight
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 May 2011
Dear Experts,
A company purchases Spare Parts & receives the Bill for freight of the same.I want to know that:
1. Is Service Tax liable on this transaction(No ST is shown in the freight bill separately)
2. If ST is liable then how it should be calculated & who is liable to pay it?
3. Under what head the Freight should be Debited- either Freight Inward or the resp. Material i.e. Spare Parts head.
Plz reply & thanks in advance.
Dear Experts,
A company purchases Spare Parts & receives the Bill for freight of the same.I want to know that:
1. Is Service Tax liable on this transaction(No ST is shown in the freight bill separately)
2. If ST is liable then how it should be calculated & who is liable to pay it?
3. Under what head the Freight should be Debited- either Freight Inward or the resp. Material i.e. Spare Parts head.
Plz reply & thanks in advance.
03 May 2011
Service Tax on transport payment is payble by GTA (Goods Transport Agent) on input services availed by him.
In this case the contract is for sale/purchase of spare parts and not for trasnport service. The vendor is simply recovering the transport charges incurred by him to deliver the product(spare parts) at buyers premises. Even though ST is not shown separately in the invoice you can presume that it is included in freight. As such buyer company is not liable to pay ST on such freight.
You can directly add freight into cost of inventory/product as it is essential expenditure to bring the subject goods at its present location/condition. Just add it in the cost of inventory/asset.
IN CASE OF composite contract where there is separate provision for sale/purchase and transportation of goods i.e. where vendor company is acting in the capacity of both manufacturer/reseller and transporter; buyer company will be liable to pay service tax as GTA provisions will be attracted.
Even though freight is being paid separately if it is exclusively being paid for the subject goods it should go into inventory/asset valuation.
In this case the contract is for sale/purchase of spare parts and not for trasnport service. The vendor is simply recovering the transport charges incurred by him to deliver the product(spare parts) at buyers premises. Even though ST is not shown separately in the invoice you can presume that it is included in freight. As such buyer company is not liable to pay ST on such freight.
You can directly add freight into cost of inventory/product as it is essential expenditure to bring the subject goods at its present location/condition. Just add it in the cost of inventory/asset.
IN CASE OF composite contract where there is separate provision for sale/purchase and transportation of goods i.e. where vendor company is acting in the capacity of both manufacturer/reseller and transporter; buyer company will be liable to pay service tax as GTA provisions will be attracted.
Even though freight is being paid separately if it is exclusively being paid for the subject goods it should go into inventory/asset valuation.
Message likes :
1 times
03 May 2011
agree with expert
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- TDS on Purchase of Immovable Property by NRI from NRI
- Capital gain from sale of house property
- Stamp Paper for partnership firm change new income tax 2025
- SFT Cash Deposit in Current Account
- FORM 26A APPLICABILITY
- When TDS on GST applied
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
