Transport Charges from Customer
This query is : Resolved
12 April 2008
Dear Sir,
If a customer agrees to pay lumpsump Transport Charges with Ser.Tax in addition to the price for delivey of goods will it be proper.
The supplier proposes to tell customer that in addition to the price of Goods he shall arrange transport also. This transport he will procure from outside and will earn some profit in it also.
Can said service be classified as Business Auxiliary Service since the supplier is a manufacturing company and not a GTA who issus Consignement Notes ?
Please clarify if the supplier collects and pays Service tax on above, will it be ok to be on safer side as he shall be earning some profit.
If a customer agrees to pay lumpsump Transport Charges with Ser.Tax in addition to the price for delivey of goods will it be proper.
The supplier proposes to tell customer that in addition to the price of Goods he shall arrange transport also. This transport he will procure from outside and will earn some profit in it also.
Can said service be classified as Business Auxiliary Service since the supplier is a manufacturing company and not a GTA who issus Consignement Notes ?
Please clarify if the supplier collects and pays Service tax on above, will it be ok to be on safer side as he shall be earning some profit.
19 April 2008
If the customer agrees to pay lumpsump then it would be construed in the value of goods and not services.
Liability to pay service tax on Transport will continue either on the consignor or consignee
If transportation cost is included in the goods, then it is onus of the supplier to pay service tax as he is the arranger of transport and liable to pay freight to the transporter.
inclusion of transport cost in the cost will increase the cost of goods and will be subject to VAT on sale of goods.
There does not seem to be element of business auxiliary services as the transporter will raise the freight bill on the supplier for providing transport and not the customer.
It is only an arrangement where the customer does not want to fall in the service tax net as the onus is being shifted to the supplier.
If you can elaborate with an example will be more helpful
You can write back on associatedm@gmail.com
Liability to pay service tax on Transport will continue either on the consignor or consignee
If transportation cost is included in the goods, then it is onus of the supplier to pay service tax as he is the arranger of transport and liable to pay freight to the transporter.
inclusion of transport cost in the cost will increase the cost of goods and will be subject to VAT on sale of goods.
There does not seem to be element of business auxiliary services as the transporter will raise the freight bill on the supplier for providing transport and not the customer.
It is only an arrangement where the customer does not want to fall in the service tax net as the onus is being shifted to the supplier.
If you can elaborate with an example will be more helpful
You can write back on associatedm@gmail.com
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