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GTA on freight payment during sale of goods

Rajanish (38 Points)

10 May 2007

Can GTA credit be availed on freight payments to transporters for transportation of goods to customers during sale?

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5 Replies

Harsh Raiyani (Chartered Accountant) (71 Points)
Replied 10 May 2007

Dear,

The definition of "Input Service" is very vide.  Any Service IN RELATION TO BUSINESS is considered as "Input Service" and hence Service Tax cerdit is eligible.

Further, Deptt has issued a clarification (F. No. 137/3/2006-CX.4, dd. 02-02-2006 -
"input service includes  "OUTWARD TRANSPORTATION OF GOODS UPTO THE PLACE OF REMOVAL".  Now "place of removal" has been defined under CE Act as per which it is (a) Factory (in case of Factory Gate Sale), a Wharehouse (where goods are permitted to be stored without payment of duty) and (c) Depot (in case of Depot Sale).

Thus, credit of service tax on outward transportation upto the place of removal is available, irrespective of the fact, whether the goods are chargeable to excise duty at specific rate OR  Ad-valoram rates on the basis of Valuation Rules u/s 4  OR as per Sec 4A of CE Act.

(Guest)

It appaers that question has not been answered properly. The question is whether service tax on GTA on transportation of finished goods to the customers place (beyond place of removal) is available or not

Chintanshah (CA Practice ) (122 Points)
Replied 10 May 2007

Further, Deptt has issued a clarification (F. No. 137/3/2006-CX.4, dd. 02-02-2006 -
"input service includes "OUTWARD TRANSPORTATION OF GOODS UPTO THE PLACE OF REMOVAL". Now "place of removal" has been defined under CE Act as per which it is (a) Factory (in case of Factory Gate Sale), a Wharehouse (where goods are permitted to be stored without payment of duty) and (c) Depot (in case of Depot Sale).

as per the aboce definition place of removal is fix but there is no fixation on place of destination and so if such GTA fulfills all other criteria for taking service tax then credit shall be available whether goods sold to customer or any other person

Ramkrishna (Accountant) (325 Points)
Replied 10 May 2007

on sale of goods service tax credit is not alowed since it is an output action . Always credit is allowed on input , which is used for payemnt of the liability on output.similiary one can use the preivious credit for payment of service tax liablity on output sale.Under CENVAT credit scheme u can also use the credit for payment of central escise duty on ur sale.