Vat on freight charges

This query is : Resolved

santosh dubey (Querist)
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19 August 2011 In a manufacturing company, EDGP is being issued on the basic value of finished goods as under :

Ass. Value (say) X
ED @ 10.3 % on X
Freight Charges (say) Y
VAT @ 4 % OR 13.5% on : (X + ED on X + Y)
Total : (say) Z
Service Tax @ 10.3% on freight (on 30% rate value)
Total Value : Z + Service tax (on freight).

My query is :
1. Can we charges VAT on Freight if the freight amount is not included in the Ass. Value ?
2. If we have charged VAT on Ass. value & freight, then why should we charge Service tax again on only freight ? Is it not tax on tax ?

U S Sharma

U S Sharma (Expert)
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19 August 2011 service tax and vat both are diff issues, service tax is central govt taxes, while VAT is state levy.

usually when the goods are sold at factory gate, vat is not charged on freight,