Cenvat credit of abated st paid

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1) CAN SERVICE RECEIVER TAKE CENVAT INPUT FOR ABATED SERVICE TAX PAID TO SERVICE PROVIDER .for example The foreign shipping company billed to the cargo agent or forwarder for ocean freight and charged service tax ( abated say 4.5%). a) Can cargo agent takes cenvat input of 4.5% service tax paid to foreign shipping company. b) How the cargo agent will pass this 4.5% ST to importer in his invoice. thanks in advance
Replies (4)

As per first proviso to sub rule (7) of CCR, 2004, service recepient can avail the credit only after the payment of service tax by service receiver to the department. 

In case of service is received by a person from the person who is not in taxable territory then liability to pay service tax is on service receiver as per notification no 30/2012- service tax dated 20-06-2012.

Further, service tax is applicable at the rate of 30% in case of goods transported by vessel as per notification no. 26/2012- service tax dated 20-06-2012 which can also be availed by service receiver as it is not expressly provided that such abatement shall be provided only to the service provider in the said notification.

In view of above, your query is addressed as under-

1. cargo agent can take credit of service tax paid under reverse charge on service availed from foreign shipping company (Here it is assumed that Foreign shipping company is providing taxable services from non-taxable territory) only after payment of service tax to the department.

2. cargo agent will raise invoice of cargo handeling services by adding his margin and service tax on such services provided which would be his output tax liability. As service tax paid @ 4.5% is cenvattable, It would be part of chain of CENVAT.

thanks for the prompt action. 
take this example

foreign shipping company raises bill for Rs 1000 plus 4.5% service tax  to cargo agent . i.e total 1045 
a) cargo agent will take input of Rs 45 

now cargo agent issues invoice to importer 
Agency Charges     500
ocean freight         1000 ( above )
Total Rs 1500
pluss service tax @ 15% i.e 225

total             1725

and net out put tax liability will be 180 ( 225 less 45)

 

It is appearing as same as I have explained above as well, as per legal provision.

Originally posted by : CA. SANDEEP SHARMA
1) CAN SERVICE RECEIVER TAKE CENVAT INPUT FOR ABATED SERVICE TAX PAID TO SERVICE PROVIDER
.for example
The foreign shipping company billed to the cargo agent or forwarder for ocean freight and charged service tax ( abated say 4.5%).
a) Can cargo agent takes cenvat input of 4.5% service tax paid to foreign shipping company.
b) How the cargo agent will pass this 4.5% ST to importer in his invoice.


thanks in advance

Here cargo agent is purely acting as PURE AGENT. He can reimburse all the expenses from importer and importer further can take cenvat credit , provided all the condition of pure agent is satisfied.


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