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TMI BlogApplicability of Service Tax on Freight RecoveryX X X X Extracts X X X X X X X X Extracts X X X X ..... Applicability of Service Tax on Freight Recovery X X X X Extracts X X X X X X X X Extracts X X X X ..... ier and air cargo only and recover freight on estimate basis which is slightly higher than what we pay to Bluedart. Am I suppose to charge Service tax on the freight recovery (which is normally higher than what I have paid) to BlueDart Reply By Pradeep Khatri: The Reply: Under GTA Services, whoever (Consigner or Consignee) pay the Freight is liable to pay the service tax on the abate/unabated v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of the freight. You are liable to pay the service tax on freight. Reply By sanjeev bajaj: The Reply: I agree with Mr. Khatri. But the question is whether company is liable to recover service tax on freight charged in bill. In my Opinion, NO, As company is not a GTA and the freight recovered from customer is not freight recovered as GTA. Reply By ganeshan kalyani: The Reply: The Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is payable by consignor or consignee whoever pays the freight. Further if you recover the amount from the distributor which may be higher it is your business call. But the differential amount collected high may be subject to service tax as it is your profit. See this aspect also. Reply By GOKARNESAN.S SUBRAMANIAN: The Reply: Mr. Rahul Bagaria You have stated that you have sent the consignm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent through Bluedart and also through air cargo. In respect of amount paid to Bluedart, the same is for the courier service provided by them. You have not stated whether Bluedart has raised invoice charging 14% service tax on the entire value under the category of 'courier service' ? OR they have charged 14% on 30% value of invoice amount under the category of "GTA" service. In b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth situations, the service provider is a Company registered under the Companies Act. Hence, even if the service is under GTA, No service tax liability on you under reverse charge. The entire tax is payable by Bluedart. Similarly, in the case of Air Cargo, the service provider is liable to pay service tax and the same is not under reverse charge. In both the above situations, you are not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay service tax under reverse charge. With regard to excess money received from your client as freight over than actual amount paid to Bluedart / Aircargo, you are only facilitating the delivery mode to your customer. Hence, it is to be treated as business support service and you are liable to pay the service tax on the entire amount received from your customer. This is as per the new definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of service given in Section 65B of the Finance Act ( Activity by one person to another for a consideration). However, while doing so, you may take credit the service tax paid to Bluedart / Aircargo and pay the balance only to Service Tax Department. Advised accordingly S. Gokarnesan Advocate 098400 87349 Reply By Deepak Birla .: The Reply: Please look the entry 66D(p) of Finance Act, 1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X .....
(p) services by way of transportation of goods-
(i) by road except the services of-
(A) a goods transportation agency; or
(B) a courier agency;
Your service may be covered in this entry and accordingly you are not required to pay service tax on freight amount recovered from customer. X X X X Extracts X X X X X X X X Extracts X X X X
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