Is postage franked subject to Service Tax?
This query is : Resolved
04 June 2008
A very funny situation has arisen. One of my clients, a mailing agency, has been asked to remit service tax on the postage franked for his clients by franking machines licensed by Post Office. The franking of postage is in lieu of physical stamp being affixed. The Indian post office Act says that it is a "duty" levied for transmission. In the account books of all business concerns, the postage is "liquid assets". The post office 'sells' postage, which means it is goods.
Further the TRU cell of Service Tax has notified that the basic mail services (which includes franking) of post office are exempted from ST. The post office also undertakes franking like mailing agency and charges different rates without any Service Tax.
I feel that the demand of Service Tax authorities that ST must be paid on the postage franked by my client is not valid.
What do the experts say? I am anxious.
S.Krishnamoorthy
Further the TRU cell of Service Tax has notified that the basic mail services (which includes franking) of post office are exempted from ST. The post office also undertakes franking like mailing agency and charges different rates without any Service Tax.
I feel that the demand of Service Tax authorities that ST must be paid on the postage franked by my client is not valid.
What do the experts say? I am anxious.
S.Krishnamoorthy
04 June 2008
are authorities asking sertvice tax on 1)value of postage franked, or 2) on service charges, billed by ur client to his clients (which will also include value of postage)?
i think there is no sense of asking service tax on 1) only. if, they are asking tax on 2), dept. might have consider this service under any other taxable head.
please let us know, under which service head or section/clause dept.has covered this service.
i think there is no sense of asking service tax on 1) only. if, they are asking tax on 2), dept. might have consider this service under any other taxable head.
please let us know, under which service head or section/clause dept.has covered this service.
04 June 2008
open
04 June 2008
Dear Shri Thyagi,
Thank you.
The Service Tax authorities demand payment of service on (1) value of total postage franked (2) service charges billed to client (3)rebate from post office for encouraging the use of franking machine.
They say the mailing service comes under BAS prior to June 2005 and thereafter under Mailing List compilation and mailing service.
The post office is also franking postage of mail of all customers for 15P per piece without levying any ST on the postage franked.
The postage according to the Indian Post Office Act is a 'duty' levied for transmission through post. Octroi duty/entry tax is exempted from the valuation in the case of Custom agents. Logically, this should apply to postage also.
I shall be grateful for your considered opinion as my client cannot charge any service tax to the clients on the postage franked. The only option available to him is to close down his small business.
S. Krishnamoorthy
Thank you.
The Service Tax authorities demand payment of service on (1) value of total postage franked (2) service charges billed to client (3)rebate from post office for encouraging the use of franking machine.
They say the mailing service comes under BAS prior to June 2005 and thereafter under Mailing List compilation and mailing service.
The post office is also franking postage of mail of all customers for 15P per piece without levying any ST on the postage franked.
The postage according to the Indian Post Office Act is a 'duty' levied for transmission through post. Octroi duty/entry tax is exempted from the valuation in the case of Custom agents. Logically, this should apply to postage also.
I shall be grateful for your considered opinion as my client cannot charge any service tax to the clients on the postage franked. The only option available to him is to close down his small business.
S. Krishnamoorthy
04 June 2008
Good
03 November 2008
The Service Tax authorities demand payment of service tax is prejudice to law and not viable in any case.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- TDS U/S. 194NF
- Applicable TDS rate for sale of property in Nov 2024
- Inventory of finished goods
- Tds on building rent monthly
- Confusion around Form 26QB fields
- Adjustment entry in the case of Individual and HUF on 31st March
- Stock difference tax applicable on composite rate or normal rate
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
Trending Online Classes
CAclubindia
