Cenvat credit on freight.

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Ankit Goyal (Querist)
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07 January 2008
We(say company A) are dealer of goods.Goods are purchased from manufacturer(say company B) and are sold to final consumer by us.

Company B sends us goods through road transport (say comapnay C i.e a independent party) and charges us for the same through the invoice by showing road transportaion charges seprately after cost of goods in invoice issued by them.

It must be noted that although company C (i.e road transport agency) is paid by company B at first but later on that cost is borne by our company (i.e company A).

My query is wether we (i.e company A) can claim Cenvat credit of service tax included in those charges (i.e charged by company C to company B) which are ultimately borne by us?

annapurna

annapurna (Expert)
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08 January 2008 In case of Goods transport Agency service if the consignor or consignee are the specified person then they are required to pay the service tax if GTA has not collected and paid the service tax. In the given case where consignor has borne the tax and has collected from your company. It is only the reimbursement of tax from your company. So company B cannot consider the tax collected from your company for CENVAT credit. The liability of the payment of service tax is on the person who pays the frieght charges to the GTA. In the given case where the company A pays the frieght, it is his liability to pay the service tax to the Department.