C&F Agent
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 August 2010
What is the liability of C&F agent in case of VAT
05 August 2010
dear anonymous,
Departmental Circular/TN F.No. B. 43/7/97-TRU, Date: 11/07/1997
2.1 "Clearing and Forwarding agent" has been defined as "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 consigning agent". The taxable service has been defined as "any service provided to a client, by C&F agent in relation to clearing and forwarding agents are engaged/appointed by manufacturer of goods (both excisable and non-excisable goods).
2.2 Normally, there is a contract between the principal and the clearing and forwarding agent detailing the terms and conditions and also indicating the commission or remuneration to which the C&F agent is entitled. A clearing and Forwarding agent normally undertakes the following activities -
• Receiving the goods from the factories or premises of the principal or his agents,
• Warehousing these goods,
• Receiving despatch orders from the principal,
• Arranging despatch of goods as per the directions of the principal by engaging transport on his own or through the authorised transporters of the principal,
• Maintaining records of the receipt and despatch of goods and the stock available at the warehouse,
• Preparing invoices on behalf of the principal
2.3 It has been decided that the person responsible for collecting the service tax in the case of services rendered by a clearing and forwarding agent shall be the person engaging/appointing a clearing and forwarding agent (Notification No. 26/97-service tax refers). It may be noted that unlike in the case of other service tax levies where the service provider is the person responsible for collecting the service tax, in the case of services rendered by the clearing and forwarding agents the service tax liability shall be discharged by the person availing the service so rendered. In order words, the principal who engages a clearing and forwarding agent is the person responsible for collecting and paying the service tax to the exchequer, Commissioners of Central Excise may therefore take necessary action accordingly and also make this position clear by issue of suitable trade notice.
2.4 Further under the Finance Act, 1997 the value of taxable service rendered by a clearing and forwarding agent has been defined as the gross amount charged by such agents from the client for the services of clearing and forwarding operations in any manner. However, under service Tax rules it has been provided that the value of taxable service in relation to services rendered by clearing and forwarding agents to a client shall deemed to be the gross amount of remuneration or commision (by whatever name called) paid to such agent by the client engaging such agent (Notification No. 27/97-ST refers).
2.5 For their services rendered, the C&F agent receives commission or remuneration which usually consists of two components:
• Minimum commission on a flat rate or turnover basis depending on the packages/consignments handled;
• A variable commission based on performance which is computed on the performance indicators agreed upon between the agent and the principal. This is usually given as a percentage of the turnover.
The above two constitute the remuneration or commission paid to the C&F agent by the principal
2.6 In cases where C&F agents engaged for various towns, states or areas are paid only by the regional or the head office of the company appointing such agents, for service tax purposes it would suffice to register only such regional or head office. In such cases the regional office or the head office, as the case may be, should also be required to give an undertaking to discharge the service tax liability.
Departmental Circular/TN F.No. B. 43/7/97-TRU, Date: 11/07/1997
2.1 "Clearing and Forwarding agent" has been defined as "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 consigning agent". The taxable service has been defined as "any service provided to a client, by C&F agent in relation to clearing and forwarding agents are engaged/appointed by manufacturer of goods (both excisable and non-excisable goods).
2.2 Normally, there is a contract between the principal and the clearing and forwarding agent detailing the terms and conditions and also indicating the commission or remuneration to which the C&F agent is entitled. A clearing and Forwarding agent normally undertakes the following activities -
• Receiving the goods from the factories or premises of the principal or his agents,
• Warehousing these goods,
• Receiving despatch orders from the principal,
• Arranging despatch of goods as per the directions of the principal by engaging transport on his own or through the authorised transporters of the principal,
• Maintaining records of the receipt and despatch of goods and the stock available at the warehouse,
• Preparing invoices on behalf of the principal
2.3 It has been decided that the person responsible for collecting the service tax in the case of services rendered by a clearing and forwarding agent shall be the person engaging/appointing a clearing and forwarding agent (Notification No. 26/97-service tax refers). It may be noted that unlike in the case of other service tax levies where the service provider is the person responsible for collecting the service tax, in the case of services rendered by the clearing and forwarding agents the service tax liability shall be discharged by the person availing the service so rendered. In order words, the principal who engages a clearing and forwarding agent is the person responsible for collecting and paying the service tax to the exchequer, Commissioners of Central Excise may therefore take necessary action accordingly and also make this position clear by issue of suitable trade notice.
2.4 Further under the Finance Act, 1997 the value of taxable service rendered by a clearing and forwarding agent has been defined as the gross amount charged by such agents from the client for the services of clearing and forwarding operations in any manner. However, under service Tax rules it has been provided that the value of taxable service in relation to services rendered by clearing and forwarding agents to a client shall deemed to be the gross amount of remuneration or commision (by whatever name called) paid to such agent by the client engaging such agent (Notification No. 27/97-ST refers).
2.5 For their services rendered, the C&F agent receives commission or remuneration which usually consists of two components:
• Minimum commission on a flat rate or turnover basis depending on the packages/consignments handled;
• A variable commission based on performance which is computed on the performance indicators agreed upon between the agent and the principal. This is usually given as a percentage of the turnover.
The above two constitute the remuneration or commission paid to the C&F agent by the principal
2.6 In cases where C&F agents engaged for various towns, states or areas are paid only by the regional or the head office of the company appointing such agents, for service tax purposes it would suffice to register only such regional or head office. In such cases the regional office or the head office, as the case may be, should also be required to give an undertaking to discharge the service tax liability.
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Querist : Anonymous
Querist :
Anonymous
(Querist)
06 August 2010
Sir I am talking about VAT liability its dealer or C&F agent pays VAT
13 August 2010
C&F agents are covered under Service tax, vat liablity only on dealers
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