Service tax on ocean freight

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N.S.Sivakumar

CAs

23 Points Posted on 06 July 2012

Dears

Whether service tax is applicable on Ocean Freight?.

Earlier to 1-7-2012, there is no specific head to tax this. New as neither in negative list nor in exempted services list, it is mentioned, the same seems to be taxable. Most of the people opine that the same is used for export Even used for export, whether an input service provide can claim such exemption. In my opinion, exporter has to go for refund machanism to get input tax used in export.

Pls advise

Replies (2)

Ajit kumar Dubey

Taxation Manager

797 Points Posted on 06 July 2012

First of all let me clear you that services by way of transportation of goods by a vessel from a place outside India up to India is covered under the negative list. Also only for few specified products, transportation by a vessel from one place in India to another is exempt via exemption notification 25/2012. Also by virtue of Notification No. 26/2012 whereby for transportation by vessel an abatement @ 50% has been introduced, it can be construed that apart from the services mentioned elsewhere service tax is to be imposed on ocean freight. After paying the tax the person responsible for paying the tax will go for refund or rebate, whichever is applicable

James Antony FCA, CISA

Chartered Accountant

61 Points Posted on 17 July 2012

Dear Sirs

In my opinion, Ocean freght will be taxable with 50% abatement. But as per the said notification, the condition for abatement is that you can not claim Cenvat Credit. So the shipping company will not get Cenvat Credit. But exporters will get a refund.

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