Frieght

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My client is paying amount to Shipping agencies for all services.He also paid frieght in connection with export of goods,Does our client liable to pay service charge on reverse charge mechanism on frieght paid?

Replies (4)

As per Place of Provisions Rule 2012 

Rule 10. Place of provision of goods transportation services The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods:

Therefore the since the place of provision is out of India that non taxable territory and hence it is out of the perview of Section 66B i.e. charging Section.

No service tax is to be charged on such Frieght.

Yes, Ocean Freight is not taxable in the above case

Firstly there is no question of reverse charge mechanism if shipping agency is India. Regarding ocean freight I would take a different stand than of my learned freinds if the payee is not a shipping line or MTO himself. If there is a freight forwarder or shippung agent who collects freight frim shipper with profit margin the difference amount shall be taxable in hands of such an agent and he cannot take shelter in rule 10 as his servicea wouldbbe that of intermediary service.

@ CA Rahul Ji In such a situation, only the commission earned for intermediary service would be taxable and not the freight amount. Irrespective of who is collecting the freitght, it remains ocean freight for transportation of goods for destination outside india and Rule 10 applicable for such freight.


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