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Service tax on inland haulage charges

11 July 2012

Can anyone provide me the circular or notification for the chargability to service tax of Inland haulage charges charges by Custom housing Agent or clearing or forwarding agent with the calculations thereof with the support. in present and past scenario.--- URGENT

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13 Replies

vanisha mittal (CA) (88 Points)
Replied 11 July 2012

no replies!!!!!

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 12 July 2012

There is no specific abatement for Inland haulage charges in the present service tax rules or under the finance act. If you can mention the actual job for which these charges are being paid then it will be useful for me to get a clear picture of the transaction and guide you accordingly.

vanisha mittal (CA) (88 Points)
Replied 12 July 2012

Mr Ajit, these charges leavy on the transport of goods frm factory to ICD by road & then from ICD to port by rail... after port tanship by sea...

so service tax chargeability on the amount need to be quantify on the freight i.r IHC from fatory to ICD & thereafter ICD to port.. hope i made the querry clear.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 12 July 2012

I hope all these activities are not done by the CHA in his personal capactity, he arranges for these services at your cost.Transportation of all the modes as mentioned by you are taxable. For service received from a GTA, service tax is to be paid by you on 25% of the value of the freight paid provided you satisfy the conditions mentioned in notification no. 26/2012 dtd 20-06-2012. For transportation by railways there is a recent communication from the CBEC that service tax will not be charged on railway freight till 30-09-2012. For ocean freight service tax is liable to be paid by the service provider only for the coastal goods. Also for export service tax will be charged by the shipping line for which you need to file either a rebate or a refund. Hope now its clear to you know the implication of service tax in the light of amended law.

vanisha mittal (CA) (88 Points)
Replied 12 July 2012

Mr Ajit,

m cleared for GTA services, bt for ICD to port, the charges named IHC by rail is chargeable to service tax for the abatement clause under Railway services in practice.. dat is wt i want to clarify..

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 12 July 2012

But as per notification no. 43/2012 dtd 02/07/2012, service tax on railway freight is deferred till 30-09-2012.Hope now you are clear on this.

surinder singh (accounting firm) (53 Points)
Replied 12 July 2012

The IHC is basically a term "Inland Haulage Charges" it can be a by way of tranportation of cargo from the dry port to port through Railway or can be a by way of road. Since the role of shipping line here is to manage the cargo, it is being a logistic support service which is being taxable under the head of Business Support Services. The matter was already been settled by the Honable TRU member of the service tax MR. Gautam Bhatacharya. So the charges charged by the CHA or forwarders is absoultely right in manner with the svc tx rate @ 10 or 12 + cess

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 13 July 2012

I do accept your concern but the situation will vary from case to case. There is a difference between the value of service under CHA service and the services provided by the railways for transporting material from one place in India to another. If the CHA reimburses the railway freight as per actuals paid by him on account of the company and also the consignment note specifies the fact that the CHA is acting as a pure agent to that respect, then no service tax will be applicable on the said transaction. As the CHA can claim the reimbursement from the value of service provided by him, it will not be liable to service tax, provided that the condition of a pure agent is satisfied.

Mayank Chawla (Article) (29 Points)
Replied 27 September 2012

Dear Ajit & Surinder I have a freight bill in which IHC is charged by them in USD, and they have charged Service tax thereon. Is it true??? If the same exp is of India then why they have charged in USD from me. the goods are ported from Barceleona to patparganj. Kindly advice ASAP

surinder singh (accounting firm) (53 Points)
Replied 28 September 2012

Hi Mayank, As per my understanding after the introduction of Negative List, the Ocean freight/Air freight incase of Import of Cargo in India is not liable for svc tx. But on the IHC, it may possible that the same is also for the Origin (Tpt from Dry prot to port) & that is the reason why the forwarder/Shipping line has billed u in USD. By the virtue of Rule NO 8 of POP services rules 2012, since the service provider & service receiver (you to whom billed) are in taxable teritory, the said services will be liable for tax.

Incase if the said IHC is performed with in India, you can ask the shipping line that they have wrongly charged the IHC in USD.

Prashant Agarwal (11 Points)
Replied 19 August 2016

DEAR SIRS,

TAKING FURTHER. PLEASE RESOLVE A QUERY OF MINE

WE IMPORTED A CONSIGNMENT ON CIP BASIS WHEREIN THE PRICE INCLUDED THE INLAND HAULAGE CHARGES FROM DISCHARGE SEA PORT TO THE DESTINATION DRY PORT.

THE SHIPPING LINE HAS BILLED US THE SERVICE TAX ON THE IHC CHARGES WHICH WE OBJECT TO PAY AS WE ARE NOT A PARTY TO THE TRANSPORTATION CONTRACT BETWEEN THE SHIPPER AND THE SHIPPING LINE.

THUS PLEASE ADVISE IF WE ARE LIABLE TO PAY THE SERVICE TAX OR NOT AND QUOTE THE RELEVANT NOTIFICATION THANKS

surinder singh (accounting firm) (53 Points)
Replied 20 December 2016

It depends on the contract you have with the forwarder or CHA. Normally, incase of forwarders we have seen that they performed the activity as a "Principle to Principle" basis, hence can charge the tax. But incase of CHA, they performs the activity as an Ägent and pays these charges to the forwarder or the shippling line on your behalf. It is important to know that in this case the invoices may issued in your favour. Still have any doubt do let me know.

Surinder Singh