Service tax on freight

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DISHA

Article

92 Points Posted on 15 October 2015

Respected Sir/ Mam

Say X, material is send to the Customer Destination by ABC co through Transpaort. But an frieght is paid by ABC co, instead of Customer. So Service Tax liablity to pay tax on freight as well as who will claim abatment.

Another query is that, if co issue an debit note for the payment of frieght to the party at the end of the month after material supply. Then whose liability is to pay tax and claim abatment. AS XYZ co pay frieght on behalf of that customer.

Kindly guide me.

Replies (3)

Neha Chhapolia

Chartered Accountant

36 Points Posted on 15 October 2015

Liability will arise on the person who makes payment of Freight to GTA. Here in your case, since the company is paying freight to GTA, hence he is liable for service tax as well as abatement. Reimbusrement of amount does not affect his liability towards service tax

Niraj Kumar Sinha

Sr. Officer SPSIL

648 Points Posted on 15 October 2015

There are options in GTA for service tax payments. In LR, there are three options of service tax liability i.e. service tax will be paid by a) Transporter, b) Consignor, or c) Consignee.

Actual liability is on

Either TRANSPORTER

Or Consignor or Consignee who bears the freight.

As far as abatement is concerned,

If transporter is liabile to pay service tax: If Transporter avails CENVAT Credit then no abatement is allowed. If transporter not avail CENVAT then abatement is allowed.

If consignor or consignee is liable to pay service tax, then he will get abatement in all cases.