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Query - Service Tax - terminal handling charges
Dear Sirs,
Sub: Service Tax – Terminal Handling Charges
The exporter engages a clearing & Forward agents. In turn Clearing forward agents engages shipping line. Shipping lines receive – Stage contains at the CY, transport to /from vessel load/discharge to/from vessel, undertake ancillary functions such as survey etc for exporters, recovering these costs through Terminal Handling Charges.
Shipping lines also undertake to transport containers to inland, by arranging such transportation through service providers, recovering the costs from exporters through Island Haulage.
Shipping lines are of the opinion that the above referred Terminal Handling charges and Inland Haulage would fall under the purview of Business Support Services see 65 (1040) could be convened under the term managing and distribution and logistics. Accordingly w.e.f. 06.06.06. They are levying Service Tax @ 12.24% on Terminal Handling charges, Inland Haulages. In turn the C&F charges collected said service tax from exporter.
It is opined by the exporter that exporter that Terminal Handling charges and Inland Haulage would fall under the purview of reimbursement of expenses and the cost incurred by the shipping line (Service provider) the recipient of service (Payment/exporter) as a pure agent of which is allowed to be excluded from value of taxable service provided since it statistics the eight conditions.
Please advice whether Terminal Handling Charges and Inland Haulage would attract service tax or excluded from value of taxable service.
Thanking you.
Replies (6)
Dear Sirs,
Sub: VAT & Service Tax on Handling Charges
The Client engages a Service provider to purchase materials on behalf of them and the Service Provider recovering, these costs through Basic Cost (cost of materials) + Handling charges and they charging both VAT and Service Tax on Handling Charges.
Please advice whether Handling charges attract both VAT and Service Tax.
Thanking you,
V.Sundarajan query
The deduction for reimbursable expenses is not easy as per Rule 5(2) of the ST determination of Value Rules 2006 [ see web site/ book for Rule] which allows that the same not be added tovalue of service.
Only a pure agent ( 4 condition to qualify) who fulfills 8 critereon wouldbe eligible to exclude. Normally these conditions are difficult. and if any margin is added then not eligible at all.
The services of assistecne in procurement is covered under business auxiliary services where inputs/ input services are procured by another. Here there maybe only servic etax on the charges.
However if the agent were to purchase the same in his name and then transfer the same to the utltimate then VAT would be applicable.
Would Need A Registration.
Please Read the Following Links You Get Clarity.
The value of taxable service in terms of Section 67(i) ibid, would be "the gross amount charged by such agent from the client for the services in any manner". Further Rule 6(8) of the Service Tax Rules, 1994 describes the same to be the gross amount of remuneration or commission (by whatever name called) paid to such agent by the client engaging such agent.
https://www.servicetax.gov.in/st-profiles-CFA.htm
https://cenexcisenagpur.nic.in/tradenotice/tnotice401.htm
Thanx
expert opinion needed
what is adefination of commisson for service tax
Whether Handling Charges covered under Service Tax?
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