Freight reverse charge in case of reimbursement

Others 999 views 2 replies

Suresh C. Kurup

manager

44 Points Joined May 2014

Hi all,

Is reverse charge service tax applicable in case it is paid as reimbursement?

Eg. Comapny 'A' has incurred some freight expense on behalf of me and he has raised a reimbursement bill to me. In this case, what I feel is, co. A is the service receiver and he is liable to pay reverse charge to the Government.

The transporter is an established firm and has charged service tax on his bill to the co. A, if I pay reverse charge on this amount when I reimburse the same to A, I am making double payment of service tax to the Government (one thorugh his bill and the other on his bill).

What I would like to know is, are we liable to pay service tax through reverse charge to the government in case of a reimbursement?.

Regards/Suresh C. Kurup

Replies (2)

CA Ashish K Bansal

partner

175 Points Joined July 2011

Reverse charge is payable on when you make direct payment to transporter who issues consignment note reimbursement of frieght charged on bill of su0plier 9f goods does not attract reverse charge

Manish K.Gandhi

Superintendent

966 Points Joined October 2013

In case when freight is paid by person as referred in Rule 2(1)(d)(B) of STR i.e. registered-factory/society/C.Ex.Dealer, Body Corporate or partnership firm, he has to pay service tax and Transporter can not charge/recover Service tax. In case the same is paid by that person and reimbursed from you, you are not making double payment as you are not paying service tax. Loss is yours that you can not avail credit thereof. However, if considering ,who paid service, as your agent and he endorse Invoice/CN etc. in your name, you may avail Cenvat Credit (not in case of your outward transportation)