03 May 2011
Service Tax on transport payment is payble by GTA (Goods Transport Agent) on input services availed by him.
In this case the contract is for sale/purchase of spare parts and not for trasnport service. The vendor is simply recovering the transport charges incurred by him to deliver the product(spare parts) at buyers premises. Even though ST is not shown separately in the invoice you can presume that it is included in freight. As such buyer company is not liable to pay ST on such freight.
You can directly add freight into cost of inventory/product as it is essential expenditure to bring the subject goods at its present location/condition. Just add it in the cost of inventory/asset.
IN CASE OF composite contract where there is separate provision for sale/purchase and transportation of goods i.e. where vendor company is acting in the capacity of both manufacturer/reseller and transporter; buyer company will be liable to pay service tax as GTA provisions will be attracted.
Even though freight is being paid separately if it is exclusively being paid for the subject goods it should go into inventory/asset valuation.
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