SERVICE TAX ON FREIGHT CHARGES

This query is : Resolved

P.S.VISHWANATHAN

P.S.VISHWANATHAN (Querist)
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07 May 2010 THE SERVICE TAX ON FREIGHT CHARGES IS TO BE DISCHARGED BY THE PARTY THAT PAYS THE FREIGHT. IN ONE INSTANCE WE HAD SUPPLIED MATERIALS FOR EQUIPMENT UNDER WARRANTY DIRECTLY FROM A SUB CONTRACTOR TO OUR CUSTOMER. SINCE THE SUPPLY WAS UNDER WARRANTY, THE FREIGHT CHARGES WERE PAID THE CUSTOMER AND THE SAME WAS DEBITED TO OUR ACCOUNT. THE CUSTOMER HAS RAISED A BILL FOR THE FREIGHT AMOUNT DULY CHARGING SERVICE TAX THEREOF. THE QUESTION IS SINCE THE FREIGHT CHARGES ARE ULTIMATELY BORNE BY US , ARE WE SUPPOSED TO PAY SERVICE TAX?

Shyam Lal Naik

Shyam Lal Naik (Expert)
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10 May 2010 In my view, since the person liable to pay freight to the GTA is liable to discharge Service Tax, the service tax shall be discharged by your customer.

However, depending on the contractual arrangement, the customer can recover the amount from you.