18 September 2007
1) mr. a is forwarder. he gets quote from shipping line say, for muscat, adds his profit margin and quotes the same to the shpr. shpr in turn picks up that line's cntr and exports his goods to muscat.
is there any type of service tax applicable on the profit margin of mr. a?
2) mr. a has not taken service tax no. can he charge the same in the invoice to the shpr as he only collects the same from shpr and pays to the shipping line. pl adv urgently.
Mr a is a forwarder and he is doing all the process relavant to a Service. Service Tax is applicable to him
pls go thru this
Clearing & Forwarding Agent’s Services
Tax on this service was introduced with effect from 16th July, 1997.
As per section 65(105)(j), any service provided or to be provided to a client, by a clearing and forwarding agent in relation to clearing and forwarding operations in any manner, is a ‘taxable service’.
As per section 65(25), “clearing and forwarding agent” means any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consignment agent.
Meaning of ‘clearing and forwarding operations’ is not defined in the Act. Hence, the words have to be understood in the sense in which these are commercially understood.
Earlier, in Prabhat Zarda Factory v. CCE (1994-2006) STT 320 = (145) ELT 222 (CEGAT), it was held that an agent procuring orders and managing, supervising and developing market is ‘C&F Agent’, even if he does not deal with the goods directly. This view was not accepted in Larsen & Toubro Ltd. v. CCE (2006) 3 STT 194 (CESTAT) and matter was referred to a large bench. Now, in Larsen and Toubro Ltd. v. CCE (2006) 4 STT 231 = 3 STR 321 (CESTAT 3 member bench), the decision has been overruled and it has been held that mere procuring or booking orders for the Principal by an agent on commission basis would not be ‘Clearing and forwarding Agent service’.
Now, these services will get covered under Business Auxiliary Service as service of commission agent. Hence, the decision really has applicability upto 9-7-2004 only, since services of commission agent are taxable from 9-7-2004.
He has to Apply for the Ser Tax number and then charge. wo that he cannot charge the shipper, he will get a adhoc number from the department.
18 September 2007
thank you for your prompt reply. if i m not mistaken there is no service tax applicable on the OCEAN FREIGHT. pl recnfm. the service tax is on the THC [terminal handling charges] and DOC charges which is charged by the line to him and same is collected from shpr and repaid to line . he is not pocketing the service tax collected from the shpr. he is only collecting service tax and paying to the line. also note he is not mentioning word 'SERVICE TAX' in the bill. so is it still not correct??? also note service tax is clubbed in the THC amount and DOC amount and billed to the shpr. if he obtains the service tax no. then on wat element the service tax is applicable to him?? also adv under which a/c head this business is covered to be liable for service tax??
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