Freight Charges include in Assessable Value, Service Tax

[SNEHAL SHAH]

R/sir,

We are the engineering manufacturing Company name XYZ LTD . Our group product is Enginnering . We are calculate & prepare Invoice as per below break up :

Total Order Value is Rs.100=00

Rs.50=00 Finished Goods Material Value which was despatch with  Excise Invoice to ABC LTD .

Rs.25=00 Transportation bill prepared XYZ LTD. ( SELF ) & send it party & Service tax paid on this.

Rs.25=00 Errection and commissioning bil prepared XYZ LTD. (SELF) & send it to party and pay Service tax .

Total Order Value complet = Rs.100=00

Now question is that we have already prepared bill and paid tax as above .

But Audit objection is that , when we have arrrange vehicle through tranporter tranport expense is only Rs.20/- instead of Rs.25/- .

Excise Auditor raise point that u can save Rs.5/- as a income and your liability to pay service tax .

Sir , I am confused for this matter please guide and give your expert advise is it service tax liability on Income or profit of the organisation ?

Also guide is it corret way of billing system as per shown above ?

If not corret please guide correct way .

With regards,

SNEHAL SHAH

Posts / Replies

[JAMES PG]

Is Service Tax paid by you on the transportation charge of Rs 25 ?

[SNEHAL SHAH]

R/sir,

Yes sir Service tax paid on transportation charge Rs.25/- by us ( XYZ LTD ).

With Regards,

SNEHAL SHAH

[JAMES PG]

Since you have paid Service Tax on the entire transportation charges of Rs 25, there cannot be any further demand of Service Tax. Freight amount shown in the Excise Invoice is approximation and may not reflect the actual freight. It has been held by CESTAT ,Mumbai in the case of Indorama Synthetics India Ltd Vs CCE, Nagpur (2009-TIOL-310-CESTAT-MUM) that freight charged in the Invoice need not be the actual freight

In the case of Bansal Wire Industries Vs CCE , Ludhiana (2004 (4) TMI 249 - CESTAT, NEW DELHI) = 2004 (178) E.L.T. 1033 (Tri. - Del.) also, the above point was upheld

[Pradeep Khatri]

As right stated by Mr. James, you need not to pay the service tax as demanded by the Department on Rs. 5/-

[SNEHAL SHAH]

R/sir ,

 I am very much thankful to both sirs for valuable and expet advise .

 With Regards,

SNEHAL SHAH