In Sale Invoice whether freight and insurance to be charges Service Tax ?
The amount we mentioned as freight charges in the invoice is just to collect the freight charges from our customer(as the purchase order condition). But we are paying the service Tax for the actual freight charges to the Transport Agency for the delivery of the consignement to the Customers place. Please clarify whether we have to pay Service Tax for the freight charged in the invoice also.
In that Case, You are acting a GTA. If you are collecting freight which is different from the amount which you are paying, It will be construed that you are providing the services of goods transport to your customer and earning profit on the same. In my opinion, you will have to discharge two liabilities:
1. Pay service tax on actual amount paid to GTA
2. Pay or collect service tax on freight received from your customer depending on the status of your customer
This is my view point. Other views are invited
Madam,
May I know the activities of your company i.e whether your company is a Manufacturer or Trader ? if trader whether central excise registered as a Dealer or not?
S. Banerjee
Dear Sir,
Our Company is a Manufacturing company, registered with both Central Excise and Service Tax.
We are also doing some services activities (Repaiing Work & Maintainence) , hence we also registered our unit in Service Tax.
Madam,
Your first query was on GTA Service now you tell that your co has been registered under R & M service.
Anyway I suggest not to change the exsiting practice, in addtion of that you avail Cenvat Credit on the amount which you have paid as a receipent of service under GTA. After paying the same amount you can adjust with your Central excise duty or R & M Service as you like.
Hope you understand my view.
Thanking you and welcome,
S. Banerjee
Ms Deepa,
You are paying service tax on actual freight and collecting the actual freight from the customer, as I understand your query. In that case, you don't have to pay again. Rather, you can collect it from the customer.
If, on the other hand, you are making a profit out of transportation, then it becomes a case of 'business auxiliary service' (procurement of service that is an input for the client). You would then have to pay service tax on the amount collected as freight from the client, without the abatement that is available for GTA.
Service tax is attracted only if you are the specified person for that transaction.
1st trans: GTA provide transportation services to you and you pay them: For this you being a manufacturer and consignor liable to pay the freight pay the ST. You can avail the credit [ subject to the decision of Karnatak HC on outward freight]
2ns Trans: You invoice and charge freight. you are not GTA[ not a specified service provider] therefore neither you njor the recepeitn is liable to pay. Even if you make a profit on the same no liability under ST.
Please clarify what happens if the freight is pre sale expense and is a part of the sale price? If it is part of the sale price, levying Service tax on the same amounts to double taxation as both VAT / CST and Service tax cannot be levied on the same transaction as per Imagic case.
CAclubindia
