Service tax on lighterage services

Queries 822 views 5 replies

Abhimanyu Bind

CA Final Student & Audit Assitant

2051 Points Joined February 2010

Good morning everybody.

Currently I am a part of Internal Audit team of a Shipping Proepritorship Firm in our city.

Yesterday while verifying Tug and Barge Income bills I came across 2 bills raised to same party,

Descripttion written on that were,

(1) Water Transport of DAP (its a type of Fertilizer) from outer Anchorage to Zero Panel by Barges. Rate- Rs. 237 PMT

(2) Lightereage of DAP in bulk by Barges on Average. Rate - Rs. 59 pmt

In both above bills, services tax was not charged by the client and reason printed on BOTH said bills was,

"Service Tax exempted vide Notification No. 25/2012-Service Tax Entry No. 20 Dated 20th June, 2012"

I refered the above notification's point No. 20 which was as follows,

"Services by way of transportation by rail or a vessel from one place in India to another of the following goods"

Point No. (j) Chemical fertilizer and Oil cakes

Now, after searching a lot of hours yesterday I couldn't find the solutions of the following,

(1) Is the lighterage service and water transportation is same for Service Tax purpose, as the client has treated these both as same???

In short, lighterage services is liable for service tax or not?

Kindly, answer with relevant notifications, sections or case laws if there are.

Thanks in advance.

Regards,

Abhimanyu Bind

Replies (5)

CA. Narottam Kumar Rawat

Indirect Tax Consultant

399 Points Joined October 2008

Dear Abhimanyu,

Before Nagative list Approach 1. Lighterage services (Loading-unloading) were falling under Cargo Handling Services. and Cargo Handling Services for Export Consignment was Out of taxability.

Under Current Provisions no specific entry is created for Cargo Handling Services. However, Transportation by water way is fall under negative list.

Services ancillary to transportation-loading, unloading, handling etc) may covered under “bundled” with the principal service owing to a single contract or a single price.

Abhimanyu Bind

CA Final Student & Audit Assitant

2051 Points Joined February 2010

Abhimanyu Bind

CA Final Student & Audit Assitant

2051 Points Joined February 2010

Thank you very much for your reply Sir. Questions remained unsolved are,

(1) Whether transportation through water services includes Lighterage services?

I couldn't find any specific definition of lighetrage in Service Tax rules, though as per wikipedia Lighetrage services means-

" Lightering (also called lighterage) is the process of transferring cargo between vessels of different sizes, usually between a barge and a bulker or oil tanker. Lightering is undertaken to reduce a vessel's draft in order to enter port facilities which cannot accept very large ocean-going vessels. Lightering can also refer to the use of a lighter barge for any form of short-distance transport, such as to bring railroad cars across a river."

I have 2 separate bills for total 62000 MTS qty of same party which is bifurcated as,

(1) Billed 53000 MTS for Lighterage services

(2) Billed 9000 MTS for water transportation through barges.

From above bill details we can see both has been treated as 2 separate services.

Second point, you have mentioned lighterage as loading unloading services, now, can we treat lighterage as loading unloading services for service tax purpose, after reading above definition??