Service Tax on Frieght Outward

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Krishnaraj

Asst.Manager - Finance & Accounts

23 Points Posted on 20 November 2009

Kindly enlight me regarding the applicability of the Service Tax on Outward Transportation. Suppose. The scenario as follows :

i am selling a product to customer for that i make an arrangement of transportation & unloading services to the destination through some contractor. But i am not showing it seperately in the invoice raised to the customer and i am collecting VAT on full basic amount ( which includes these transportation and unloading charges also ).

Whether this outward transportation will attract a service tax ( for both individul or corporate body ) ?? what will be my liability if the contractor does not raise service tax on his bill ? Do i have to pay service tax on this to government and deduct the same from the contractor or any excemption is availabe for this as per the law ?

Kindly clarify the same !!!

Replies (2)

CA. Prabudh Sharma

82 Points Posted on 20 November 2009

In relation to transport of goods by road in a goods carriage, where the consignor or consignee of goods is,-

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

(b) any company established by or under the Companies Act, 1956 (1 of 1956);

(d) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that

Act in force in any part of India;

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

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

thereunder; or

(g) any body corporate established, or a partnership firm registered, by or under any law;

the person paying the freight is liable to pay service tax. Else, the GTA is liable. If u or consignee falls in any of the aforesaid category, u (bcoz u pay the freight) r required to pay ST. U recover it from the GTA (contractor) or not is a matter of terms of agreement between u & him.

Although I feel he shall not agree for the above deduction.