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2016 (4) TMI 332 - AUTHORITY FOR ADVANCE RULINGS

2016 (4) TMI 332 - AUTHORITY FOR ADVANCE RULINGS - 2016 (46) S.T.R. 817 (A. A. R.) - Service tax obligation on which portion under reverse charge mechanism - While discharging foreign C & F Agent raised composite bill / invoice liability - Foreign C & F Agent would be incurring the expenses which is to be included in the valuation of goods as per Section 14 of the Customs Act, 1962 for the purpose of charging Customs duty on behalf of the applicant with respect to freight, insurance, loading, un .....

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envisages that the expenditure or costs incurred by the service provider as a pure agent of recipient of service shall be excluded from the value of taxable service, if all the following conditions, are satisfied. Therefore, while discharging foreign C & F Agent raised composite bill / invoice liability under reverse charge, Service Tax is chargeable on said bill / invoice excluding expenditure or costs incurred by C & F Agent as a pure agent, if conditions enumerated in Rule 5 ibid are met. - .....

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proposes to appoint a foreign C & F Agent for necessary support in case of material handling, arranging shipping liners, ocean freight, material clearance both at origin and destination port and other related local transportation etc.; that foreign C & F Agent would issue a composite bill / invoice in his respective currency. Applicant states that on said composite bill / invoice, all duties of Customs would be paid. The question raised by the applicant before this Authority is; While d .....

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e agent', as defined in Rule 5 (2) of Service Tax (Determination of Value) Rules, 2006. 3. During proceedings before this Authority, applicant submitted that a foreign C & F Agent would be incurring the expenses on behalf of the applicant with respect to freight, insurance, loading, unloading and handling charges of goods, etc. proposed to be imported. Further, all these expenses incurred are included in the valuation of goods as per Section 14 of the Customs Act, 1962 for the purpose of .....

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ia; that question of rendering any service in respect of such goods by way of cargo handling or otherwise can take place only after the customs transaction is completed; that therefore the levy to Service Tax the transportation by barges from the mother vessel to the jetty on-shore, would not arise at all since the activity is part of the import transaction leviable to import duty. Therefore, this issue was mainly to decide where the customs transaction ends and service transaction begins and wa .....

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istent on the issue whether Service Tax is chargeable on the component, on which customs duty has been levied. During the Court proceedings, the Advocate of the applicant candidly admittedly that there is no statute to indicate that if customs duty is chargeable, Service Tax is not leviable on the same component. Therefore, we do not agree with the applicant on said aspect of double taxation. 5. Further, Notification No. 34/2012-ST dated 20.06.2012 and Notification No. 31/2010-Cus dated 27.02.20 .....

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e Tax on transportation of said goods. It is to be observed that services by way of transportation of goods by a vessel from outside India up-to customs station of clearance in India shall not be chargeable to Service Tax subject to Rule 5 of Service Tax (Determination of Value) Rules, 2006 and is discussed subsequently. 7. It is observed that as per Notification No. 30/2012-ST dated 20.06.2012, the taxable services provided or agreed to be provided by any person which is located in a non-taxabl .....

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able by the applicant i.e., recipient of service. 8. As per Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, where any expenditure or costs are incurred by the Service provider in the course of providing service, all such expenditure or costs shall be included in the value for the purpose of charging Service Tax on said service. Further, Rule 5(2) ibid inter alia envisages that the expenditure or costs incurred by the service provider as a pure agent of recipient of service shall b .....

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