Service tax applicability on storage and transportation

Queries 1186 views 2 replies

Mahender

Director

32 Points Joined November 2010

Just wanted to check if Service Tax is applicable in the following case:

1. We are a Logistics Company supplying Dry and Frozen Items to Restaurants

2. We have a distributor in Gujarat who accumulates the Dry and Frozen Items on behalf of us to supply to our customers in Gujarat

3. The distributor has a cold storage wherein he stores our material on receipt on our behalf until the supply has to be made to the restaurants. Supplies is made once we raise an Invoice in our books and send it to them for supply.

4. We pay him a fixed rent or percentage of sales whichever is higher on a month on month basis.

Please advise

Replies (2)

CA Amit Jaiswal

Finance Manager

2720 Points Joined September 2008

In the given case the company is providing the services of Storage and Transportation. Cold storage is exemt from service tax. On transportation (GTA), in most of the cases the receiver of service is liable to pay the service tax (reverse charge). In rest of the cases the company is liable to pay service tax on 25% of the invoice amount of road transportation.

Sushma Mevacha

Executive

394 Points Joined July 2009

First of All, there is no such exemption is available for the Cold Storage Service w.e.f. 01.07.2012 as there is no exepmtion is granted in Negative List and in Mega Exepmtion Notification No. 25/2012 - ST Dated : 20/06/2012 hence Service Tax is applicable for the Storage Service.

Further, IIf you handling Charges are composite then there will not be any separate effect of Transportation. But if you are raising the Separate Bill for Transportation, then If your receiving Party is liable for Service Tax payment i.e. as under as per Notification 15/2012 - ST 20/06/2012

(ii) provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the consignor or the consignee is,—

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

(c) any co-operative society established by or under any law;

(d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons;"