Trading with own vehicles

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Ganesh (Querist)
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22 July 2008 Dear Friends,

We're doing trading business from last few years with own unique vehicles (means they can load or unload the same material, we can't mix any other and only one way with load and return with empty).

i.e., we're purchasing material from manufacturing unit with our own vehicles and delivery to customer place with the same vehicle. And we're billing for the unloading or acknowledged quantity measured by weighment at customer place. And we're not showing any transportation in the bill, since it was delivery on FOR basis as per customer purchase/supply order. And at the same time, we're charging penalty for waiting/delay charges for not taking the material immediately after sending the vehicle. This was mentioned in our offers/purchase/supply orders.

Now, the thing is that this Service Tax authorities are asking us to pay for ST on this penalty, which was charging on waiting/delaying the vehicle. We're putting this to release the vehicle immediately by taking the material from the vehicle and trying to do more number of trips and gaining from it. If it was delaying we can't get more from that vehicle.

And also asking us to show transportation
separately & pay on transportation.

So, kindly give us a good suggestion from all of you.

Thanks

Shyam Lal Naik

Shyam Lal Naik (Expert)
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10 June 2010 1. Demurrage is not service rendered and hence not liable to Service Tax.

2. In the instant case, you are a transporter/Vehicle Owner and not a transport Agent. Relying on the budget speech of the Finance Minister, courts has held that truck owner are not Goods Transport Agent and hence Service tax not attracted in this case.

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