Service Tax on Services rendered by Custom House Agents and Steamer Agents — Procedure - Service Tax - 39-C.E. (Service Tax 39)/97

Attention of the Trade is invited to this office Trade Notice No. 38-CE (Service Tax)/97, dated 9-6-1997 by which it was informed about the imposition of service tax on the services rendered by Custom House Agents and Steamer Agents w.e.f. 15-6-1997 in terms of Notification No. 17/97-Service Tax, dated 6-6-1997 - Govt. of India, Ministry of Finance, Department of Revenue. 2. It is felt that some clarifications in respect of these two services given below for guidance of Public/Trade would be beneficial. Custom House Agents 2.1 The expression custom house agent has been defined to mean a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act, 1962 . A person is permitted to operate as a custom house agent, temporarily under regulation 8(1) and permanently under regulation 10 of the Customs House Agents Licensing Regulations, 1984. 2.2 As per the Finance Act, 1997, the taxable service rendered by a custom house agent means any service provided to a client by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods. The value of the taxable service in relation to the service provided by a custom house agent to a client has been defined to constitute the gross amount charged by such agent from the client for services rendered in any manner in relation to import or export of goods. The service tax is chargeable at the rate of 5% on the value of the taxable service. 2.3 The service rendered by the custom house agent are not merely limited to the clearing of the import and export consignment. The CHA also renders the service of loading/unloading of import or export goods from/at the premises of the exporter/importer, the packing weighment, measurement of the export goods, the transportation of the export goods to the customs station or the import goods from the customs station to the importer s premises, carrying out of various statutory and other formalities such as payment of expenses on account of octroi, destuffing/ pelletisation terminal handling, fumigation, drawback/DEEC processing, survey/amendment fees, dock fees, repairing and examination charges, landing and container charges, statutory labour charges, testing fees, drug control formalities, sorting/marking/stamping/sealing on behalf of the exporter/importer. The Custom House Agent also incurs various other expenses such as crane/fork lift charges, taxi charges, photostat and fax charges, bank collection charges, courier service charges, and miscellaneous other expenses on account of the exporter/importer. For all the above charges the CHA is ordinarily reimbursed by the importer/exporter for whom the above services are rendered. Apart from the above charges, the CHA also charges the client for his service under the head/ nomenclature of agency and attendance charges or similar kind of heads which is purported to be his service charge in respect of the services rendered in relation to the import/export goods. 2.4 It is clarified that in relation to Custom House Agent the Service tax is to be computed only on the gross service charges, by whatever head/nomenclature, billed by the custom house agent to the client. It is informed that the practice obtaining is to show the charges for service as agency commission , charges , agency and attendance charges , agency charges and some similar descriptions. The service tax will be computed only with reference to such charges. In other words, payments made by CHA on behalf of the client, such as statutory levies (cess, customs duties, port dues etc.) and various other reimbursible expenses incurred are not to be included for computing the service tax. 2.5 In many cases the customs house agent undertakes turnkey imports and exports where a lump sum amount is charged from the client for undertaking various services. In these cases, the lump sum amount covers not only the agency commission fee but also other expenses and no separate break-up is given in respect of these expenses. It has been decided that in such cases, the value of the taxable service tax shall be 15% of the lump sum amount charged to the client. The custom house agents, may be advised to show the service charges as 15% of the such lump sum amount of the bills. Service tax of 5% will be chargeable on the above 15%. 2.6 Sometimes CHAs sub-contract their work to CHAs located in other stations. In such cases, it is possible that the sub-contracting CHA raises the bill on the main CHA who inturn raises the bill to the client. It has been decided that in such cases the sub-contracting CHA will not be required to pay service tax on the bills raised by him on the main CHA. The service tax will be payable by the CHA who provides the actual service to the client and raises the bill to the client. 2.7 A CHA may have various branch offices located at different stations but all these branch offices do not raise the bills and only the main or central office will be raising the bills. In such cases, only the central office should be registered with the Deptt. The Commissioners of Central Excise may verify any such contention and allow the payment to be made by Head Office. 2.8 Sometimes the bills raised by the CHA are not entirely paid by the client and the CHA is forced to give discounts. In such cases where the final bill raised is lower than the initial bill, it may be mentioned that the law provides for claiming of refund of excess service tax paid within six months from the date of payment of tax. If the CHA can produce evidence of having charged less service fee, he may claim refund of excess service tax paid, if any, as per the provisions of law. Steamer Agents 3.1 The expression `steamer agent has been defined to mean any person who undertakes, either directly or indirectly, - (a) to perform any service in connection with the ships husbandry or dispatch including the rendering of administrative work related thereto; or (b) to book, advertise or canvass for cargo for or on behalf of a shipping line; or (c) to provide container feeder services for or on behalf of a shipping line; 3.2 The taxable service provided by a steamer agent to a shipping line, is the service provided by a steamer agent in relation to a ship s husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo, including container feeder services. The value of the taxable service in relation to service provided by a steamer agent to a shipping line, shall be the gross amount charged by such agent from the shipping line for services in relation to a ship s husbandry or dispatch or any administrative work related thereto or in relation to the booking, advertising, or canvassing of cargo, container feeder services including the commission paid to such agent. 3.3 Steamer agents incur various types of expenses on behalf of the shipping line such as pilottage and berth hire charges, Indian Coast light dues paid to the port authorities, cargo expenses paid to port authorities and transporters such as CONCOR/railways, private transporters, chartered accountants fee, Income Tax, brokerage paid on export cargo, ship handling expenses paid to stevedoring agents. For all the above charges the Steamer agent is ordinarily reimbursed by the shipping line. Further, the steamer agent bills the principals i.e. the shipping line, for two types of service charges. One is called the husbandry fee which they charge for a ships husbandry. The second is the agency commission which is paid by the shipping line on the import and export cargo. These commission are usually paid as a percentage of the net ocean freight (basic freight) which is clearly indicated in the agreement entered into between the steamer agent and shipping line. 3.4 lt is clarified that in relation to the steamer agent the service charges will constitute the husbandry fee as well as the agency commission on import/export cargo. Other expenses incurred by the steamer agent on behalf of the shipping line shall not be taken into account. 3.5 It has been represented that the accounting for purposes of service tax should be on per voyage, per vessel basis and further that the registration for service tax purposes should be done only of their sea port offices. It has been decided that only such sea port offices of the steamer agent should be registered for service tax purpose which are raising the bill to the shipping lines. The branch offices in ICDs which are just sales offices and do not raise any bills to the shipping line, need not be registered. This is for the reason that billing is done by the sea port offices and not the branch offices. Miscellaneous 4.1 It may be mentioned that the provision of Sections 68 and 76 of the Finance Act, 1994, as amended by the Finance Act, 1997 will also come into force from 15th June, 1997. Section 68(2) of the Finance Act, 1994 provides that the service tax collected during a month shall be deposited to the Government account by the 15th of the succeeding month, Section 68(3) of the Finance Act, 1994 as amended provides that a person responsible for collecting the service tax who fails to collect such tax shall be liable to pay such tax to the Government within 75 days from the close of the month in which the service was rendered. Section 76 further provides that in case of failure to pay the tax within the period of 75 days the person responsible for collecting the service tax shall in addition to the tax and interest payable thereon be liable to pay a penalty. 4.2 As per Section 69 of the Finance Act, 1994 read with Rule 3 and 4 of the Service Tax Rules, 1994 , every person responsible for collecting the service tax is required to be registered with the concerned Central Excise Officer appointed under Rule 3, Notification No. 18/97-Service Tax, dated 6-6-1997 amends Rule 2 of the said rules so as to prescribe that the person responsible for collecting the service tax in relation to the services provided by a CHA or a steamer agent shall be the CHA or the steamer agent, as the case may be, who raises the bill for services rendered and shall include each of the offices of such agents which raise the bill for services rendered to their client or their principal, as the case may be. 4.3 Rules relating to service tax on other services have already been notified and the trade is advised to go through them. However, for the benefit of the services which are to be covered by the Notification No. 17/97-Service Tax, dated 6-6-1997 , the procedures to be followed for registration, maintenance of documents, filing of returns and the manner in which the service tax is to be paid and which were contained in Chapter V of the Finance Act, 1994 , notified to the trade vide this Commissionerate Trade Notice No. 46-CE (Misc. 46)/94, dated 7-7-1994 are reproduced along with annexures as amended from time to time and by the Finance Act, 1997. Registration 4.4 The assessees will apply for registration in Form ST-1 (Annexure-I). An acknowledgement will be provided on the duplicate copy of the ST-1 form by the Superintendent of Central Excise (Service Tax) in Room No. 254, CR Building, I.P. Estate, New Delhi. Registration No. will be allotted on receipt of their application. 4.5 Payment of Service Tax. - Rule 6 of the Service Tax Rules, 1994 , deals with the payment of service tax. The Service Tax will be deposited under Head 0044, in form TR-6 in yellow colour as amended vide Service Tax Circular No. 17/ 11/96, dated 24-10-1996 (a copy of which is enclosed as Annexure-II) in any of the bank branches, at present authorised to collect Central Excise Duties within the jurisdiction of Commissionerate of Central Excise, Delhi. A list of such branches along with the codes Nos. (Annexure-III) is enclosed. It is to be noted that each assessee shall choose only one branch convenient to him and all payment shall be made in that branch only. 4.6 The concept of provisional assessment has been built into the scheme of service tax rules. Whenever an assessee, for any reason unable to correctly estimate on the date of deposit, the actual amounts collected for any particular month of period, the assessee may make a request in writing to the Asstt. Commissioner of Central Excise (Service Tax), CR Building, I.P. Estate, New Delhi to make a provisional assessment of the tax on the basis of the amount deposited. The said Central Excise Officer will, on receipt of such request, order provisional assessment of tax. In this regard, the provisions of Central Excise Rules, 1944 have been made applicable. However, there is no requirement to enter into a bond in respect of service tax. 4.7 The Assessee will file the quarterly return in Form ST-3 as amended vide Notification No. 15/97, dated 25-4-1997 in (Annexure-IV) in triplicate. In respect of provisional assessment, the assessee is required to submit a memorandum in Form ST-3A (Annexure-V) showing details of difference between the Service Tax deposited and the service tax actually collected for each month. The assessee shall submit quarterly return along with the copy each of Form TR-6 for the months covered in the quarter. 4.8 The assessment shall be completed on the basis of the particulars furnished in the quarterly return ST-3 and ST-3A , by the said Central Excise Officer. The triplicate copy of the quarterly return so assessed shall be returned to the assessee with assessment memorandam. In cases where the service tax assessed is more than the service tax self determined and paid by the assessee, the assessee shall pay the deficiency along with the amount of interest determined thereon within 10 days of the receipt of the copy of the quarterly return from the Central Excise Officer. The assessee may apply for refund, whenever he has paid service tax in excess of tax assessed, in accordance with the provisions of Section 11B of the Central Excise Act, 1944 . Appellate Mechanism 5. Appellate mechanism provided in Central Excise Act, 1944 has been made applicable to Service Tax with some modifications. ( Section 85 and Section 86 ) of Finance Act, 1994 may be referred to). 6. Administrative Machinery for Collection of Service Tax : 1. A Service Tax cell has been created in the headquarters office of the Commissionerate of Central Excise, Delhi namely :- The Assistant Commissioner of Central Excise (Service Tax Cell) Commissionerate of Central Excise, Delhi Room No. 116, C.R. Building I.P. Estate, New Delhi-2 Tel. No. 3722048 EAPBX 3317741, 43 Ext. 320, 310, 376 The Trade is advised to send all correspondences, applications for registration, returns etc. to the above address. 2. The trade may please note that (a) Application for registration in Form ST-1 received from the assessee shall be acknowledged by an officer of the rank of Superintendent of Central Excise. (b) Certificate of registration in the Form ST-2 will be issued under the name and signature of the Assistant Commissioner. (c) The Service Tax collected during any calendar month by the Assessee under sub-section (1) of Section 68 of the Finance Act, 1994 shall be paid to the credit of Central Government in Form TR-6 by the 15th of the following month. (d) Any person, responsible for collecting the Service Tax, who fails to collect the Tax in accordance with the provisions of sub-section (2), shall notwithstanding such failure be liable to pay such tax to the credit of the Central Government within SEVENTY FIVE DAYS from the end of the month in which the service was rendered. (e) Quarterly return filed by the assessee (para 4.7 above) will be assessed by the Superintendent of Central Excise (Service Tax) (f) For the purpose of provisional assessment whenever the Asstt. Commissioner will make an order for provisional assessment for the tax, on request being received in writing from the Assessee. (g) The powers of Assessment under Section 72 , 73, 74 , of Chapter V of the Finance Act, 1994 dealing with best judgment Assessment, value of taxable service, escaping assessment, recti- fication of mistake will be exercised by the Asstt. Commissioner. In respect of Assessment periods of 5 years or more referred in Section 73 of the Finance Act, 1994 (32 of 1994) Commissioner will be the competent authority to exercise the powers. Annexure-I Form ST-1 (Service Tax Rules, 1994) Application for Registration under Section 69 of Finance Act, 1994 (32 of 1994) 1. Name of the assessee ________________________ 2. Address of the assessee ________________________ ________________________ 3. Address of the premises to be registered ________________________ ________________________ 4. Category of the service ________________________ 5. Fax/Telex and Phone Number ________________________ 6. Form of organisation (indivi- dual/company/partnership, etc.) ________________________ 7. Additional information required in the case of stock broker (a) Name of the Member, with Code No. ________________________ (b) Name of Stock Exchange registered with ________________________ (c) Date of admission of membership ________________________ (d) Whether member of more than one Stock Exchange? If so, please give name of the Stock Exchange with Code Number ________________________ (e) Registration Number allotted by Securities and Exchange Board of India (copy of certificate of registration may be enclosed or a copy of application for registration with SEBI may be enclosed) ________________________ 8. I/We _________________________ agree to abide by all the provisions of the Service Tax Rules, 1994 and any order issued thereunder. 9. I/We ________________________________ declare to the best of my/our knowledge and belief that the information furnished herein is true and complete. Place : Signature of assessee Date : or his authorised representative Annexure - II Original/Duplicate/Triplicate/Quadruplicate Form TR-6 for Payment of Service Tax Major Head 0044 Service Tax TR-6/GAR 7 Challan No.___________________ (Treasury Rule 92/Receipt and Payment Rules 26) Challan of amount paid into the _______________(Code No._____) Accounting Commissionerate _______________(Code No._____) Name of the Bank/Branch with Code Number Division _______(Code No._____) Name of the Focal Point Bank ______________(Code No._____) Range _________(Code No._____) Name and address of the assessee ___________________________________ _________________________________________________(Code No. _______) By whom tendered _________________________________________________ Full par- ticulars of the remittance and of autho- rity Head of Accounts and Major Head (indicate against the appropriate Minor Head) Accounting Code No. Amount Tendered Counter Signature of the Departmental Officer (where required) By Cash By Cheque/Draft/Pay Order etc. 0044 Service Tax 101. Tax on Tele- phone Billing 102. Tax on General Insurance Premia 103. Tax on Stock Brokerage Com- mission 104. Tax on Adver- tisement Services 105. Tax on Courier Services 106. Tax on Radio Paging Services Total (in words) Rupees _________________________________________________ Date : ___________________ Signature of the tenderer______________ (To be filled in by the Bank) Received payment (in words) Rupees ________________________ _______________________________ Space for Focal Point Bank Stamp indicating the date, amount credited to Government Account Bank s Receipt Signature of the Stamp Authorised Officer of the Bank Name of the Bank ______________ Please ensure that you have filled in the details overleaf without which the department will not be responsible for proper adjustment of amount paid by you (Please see reverse for instructions) Annexure-III Listing of Branch Bank Directory Punjab National Bank/State Bank of India BB Code Branch Bank Name Local/Outstanding 0201579 State Bank of India, Suraj Pur O 0202704 State Bank of India, Narsingpur, Gurgaon O 0300014 PNB, Ambala Cantt. O 0300015 PNB, Ambala City O 0300035 PNB, Bahadurgarh O 0300036 PNB, Ballabgarh O 0300053 PNB, Bhiwani O 0300112 PNB, Delhi Cantt. L 0300113 PNB, Chandni Chowk L 0300114 PNB, Chawri Bazar L 0300115 PNB, Civil Lines L 0300116 PNB, Katra Mohan L 0300117 PNB, Darya Ganj L 0300118 PNB, Fountain L 0300119 PNB, Bank Street L 0300120 PNB, Gurdwara Road L 0300121 PNB, Kashmiri Gate L 0300122 PNB, Khari Baouli L 0300123 PNB, Naya Bazar L 0300124 PNB, Sadar Bazar L 0300125 PNB, Shahadara L 0300126 PNB, Subzi Mandi L 0300127 PNB, Asaf Ali Road L 0300128 PNB, Lodhi Road L 0300129 PNB, Minto Road L 0300130 PNB, Paharganj L 0300131 PNB, Janpath L 0300132 PNB, Regal Building L 0300133 PNB, Trosical Building L 0300135 PNB, East Patel Nagar L 0300147 PNB, Jangpura L 0300148 PNB, Kirti Nagar L 0300149 PNB, Khan Market L 0300153 PNB, Parliament Street L 0300154 PNB, Kamla Nagar L 0300155 PNB, Bara Hindu Rao L 0300156 PNB, Kalkaji L 0300159 PNB, Green Park L 0300160 PNB, Nizamuddin L 0300161 PNB, Gandhi Nagar L 0300162 PNB, R.K. Puram L 0300167 PNB, N.I.T., Faridabad O 0300175 PNB, Jor Bagh L 0300176 PNB, South Extension L 0300188 PNB, Gurgaon O 0300197 PNB, Hansi O 0300203 PNB, Hissar O 0300219 PNB, Khera Bazar, Jagadhjri O 0300231 PNB, Jind City O 0300248 PNB, Kaithal O 0300259 PNB, G.T. Road, Karnal O 0300286 PNB, Model Town, Karnal O 0300360 PNB, Narnaul O 0300376 PNB, Palwal O 0300377 PNB, G.T. Road, Panipat O 0300405 PNB, Rewari O 0300406 PNB, Jhajjar Road, Rohtak O 0300471 PNB, Yamuna Nagar O 0300521 PNB, Ambala City M.T. O 0300522 PNB, Baldev Nagar, Ambala O 0300547 PNB, Bhuna O 0300577 PNB, Charkhi Dadri O 0300602 PNB, Okhla L 0300604 PNB, West Patel Nagar L 0300605 PNB, Rajouri Garden L 0300612 PNB, Naoroji Nagar L 0300613 PNB, Gokhale Market L 0300617 PNB, Rana Pratap Bagh L 0300618 PNB, Azadpur L 0300619 PNB, New Rohtak Road L 0300620 PNB, Kishan Ganj L 0300622 PNB, Mehrauli L 0300627 PNB, Naraina L 0300629 PNB, New Rajendra Nagar L 0300632 PNB, Tilak Nagar L 0300635 PNB, Dev Nagar L 0300636 PNB, Sarvodaya Enclave L 0300637 PNB, Ashok Vihar L 0300646 PNB, Krishna Nagar L 0300647 PNB, Malviya Nagar L 0300649 PNB, Shakur Basti L 0300650 PNB, Model Town L 0300653 PNB, Fatehabad O 0300661 PNB, Gannaur O 0300667 PNB, Gohana O 0300778 PNB, Mevla Maharaj Pur O 0300817 PNB, Pahwa O 0300838 PNB, Civil Line, Rohtak O 0300873 PNB, Thanesar O 0300903 PNB, C.A. Panipat O 0300916 PNB, Kathmandi, Rohtak O 0300925 PNB, Rasoi O 0300948 PNB, V.C.C. Rohtak O 0300991 PNB, Mall Road L 0300992 PNB, Lajpat Nagar L 0300993 PNB, Greater Kailash-I L 0300994 PNB, Moti Bagh L 0301060 PNB, Kohand (Karnal) O 0301111 PNB, Faridabad, Sector-15 O 0301120 PNB, E.C.E. House (FPB) L 0301398 PNB, Shastri Nagar L 0301457 PNB, Sector-14, Sonepat O 0301470 PNB, Gujrawala Town L 0301501 PNB, Punjabi Bagh L 0301502 PNB, Swami Ram Tirath Nagar L 0301503 PNB, Janak Puri L 0301504 PNB, Chirag Delhi L 0301509 PNB, Maharani Bagh L 0301510 PNB, Panchsheel Park L 0301513 PNB, Tri Nagar L 0301514 PNB, Khanpur L 0301518 PNB, Patparganj L 0301519 PNB, Najafgarh Road L 0301520 PNB, Barakhamba Road L 0301522 PNB, Rajendra Place L 0301524 PNB, Vijay Nagar L 0301526 PNB, Shakti Nagar L 0301527 PNB, Hari Nagar L 0301529 PNB, Nehru Place L 0301530 PNB, Vasant Vihar L 0301534 PNB, Roshanara Bagh L 0301536 PNB, Kotla Mubarakpur L 0301539 PNB, Lawrance Road L 0301546 PNB, Geetanjali L 0301665 PNB, Dharuhera O 0301710 PNB, Pritam Pura L 0301736 PNB, Chanakya Puri L 0301847 PNB, Maya Puri L 0301848 PNB, Hauz Khas L 0301988 PNB, Bhikaji Cama Place L 0302002 PNB, Model Town, Hissar O 0302140 PNB, S. Pur Road, Yamuna Nagar O 0302258 PNB, Faridabad, Sector-37 O 0302938 PNB, Panchkula O 0302939 PNB, Pinjore O 0303009 PNB, Babra Mohlla, Rohtak O 0303145 PNB, Sukhreali O 0303364 PNB, Shohna O 0303862 PNB, Udyog Vihar O 0300422 PNB, Shahbad Markande O 0300430 PNB, Sirsa O 0300434 PNB, Sonepat O 0300443 PNB, Smalkha O 0300452 PNB, Haryana O Annexure-IV Form ST-3 (Service Tax) Return of Service Tax credited to the Government of India for the quarter ending________________ Commissionerate_____________ 1. Name of the assessee address : 2. Category of service : 3. Central Excise Registration No. : S. No. Month Value of taxable service in terms of Sec. 67 of the Finance Act Value of taxable service realised (indicate break up of the amount month-wise) Service tax @ 5% Leviable on (3) Service tax collected month-wise 1 2 3 4 5(a) 5(b) 1. 2. 3. Total Amount of interest payable Total amount paid Challan No. and date Journal slip and date Service tax paid to the Government credit Interest paid 6 7(a) 7(b) 8 1. 2. 3. Total I/We declare that I/We have compared the above particulars with the records and books maintained by us and that the same are correctly stated. Place : Name and Signature of Assessee Date : or his authorised representative ASSESSMENT MEMORANDUM 1. The Service tax has been paid correctly. 2. The Service tax has been short/excess paid to the extent of Rs.____________. The correct assessment of the service tax is as per the following details. The assessee is requested to pay the deficiency of Rs.________________ within 10 days from the receipt of the Assessment Memorandum. The assessee may apply for Refund if any in___________. Signature and stamp of Central Excise Officer Annexure-V Form ST-3A* Memorandum for Provisional Deposit under Rule 6 of the Service Tax (Rules), 1994 For the month of ________ 19____ S. No. Provisional value of taxable service in terms of Sec. 67 of the Act Provisional amount of service tax @ 5% paid Form TR-6 No. and date Actual value of taxable service in terms of Sec. 67 of the Act 1 2 3 4 5 Actual amount of service tax payable Difference between the amount of provisionally paid tax and amount of service tax payable Form TR-6 No. and date indicating payment under col. 7 Remarks 6 7 8 9 Reasons for making provisional deposit of service tax ___________. * Attach separate sheet for each month.