Terminal Handling Charges - Reimbursement of charges service tax liability, Service Tax

[P.M.Raveendran]

Dear Sir 1. Whether Terminal Handling Charges (THC) done by Shipping agents comes under “Business Support Services”? 2. If X limited paying THC to Shipping agents & reimburses same amount it from his customer, Y, whether Service tax liability arises for X limited? 3. Whether any liability if reimburses with profit from his customer, Y? 4. If assessee applies for new registration, after 7 days, if no response from department. There will be a deemed registration. Suppose if the assessee has not received any registration certificate, what should be done? How to mention registration certificate number in half- yearly returns?

Posts / Replies

[Madhukar N Hiregange]

Under business support the managing of distribution and logistics as well as fulfillment services are covered. Therefore it appears that the same may be covered wef 1st may 2006. In normal course reimbursments were not a subject matter of levy of ST. However with the Service Tax (Determination of Value) Rules, 2006 wef 19.4.2006, reimbursements as a pure agent only qualify . For being a pure agent 8 conditions are to be met. One of them is that there is no add on. Therefore it appears that if margin is added then the service would be taxable for the intermediary. If there is no repsonse from the department, a reminder maybe sent( speed post or RPAD) and acknowledgement retained. The Registration number would be the PAN no followed by ST-001 which can be printed in the invoices. The returns can also be filed to the juridicational commissionerate and the covering letter may indicate that the registration is still awaited.