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Gta outward

jayesh (accountant) (361 Points)

22 September 2011

DEAR SIR,

CAN I TAKE GTA OUT WARD CREDIT IN EXCISE.

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4 Replies

DAYANANDA K N (ACCOUNTS EXCECUTIVE) (575 Points)
Replied 22 September 2011

Cenvat credit of service tax paid on outward transportation upto place of removal you can avail.

Regards

Dayananda

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CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 23 September 2011

Yes , but up to place of removal only.

HS Negi (Senior Executive- F&A) (590 Points)
Replied 24 September 2011

Dear Jayesh,

For avaiing input service credit on outward freight up to the customer door step, Please ensure the following thinds as per circular 97 :

1. Freight should be the intergral part of the cost .

2. Transit insurance at your part

3. Delivery to be Customer door step. inco term should be FOR Destination.

Regards

HS Negi

Gourav Choudhary (CA and CS finalist) (143 Points)
Replied 27 September 2011

Dear Jayesh,

The company may receive the service from GTA for the following two purposes:
1) For inward transport of raw materials required for the manufacture of excisable goods; and
2) For outward transportation of finished product from factory.

Here in case of outward transportation also, there are two parts as from factory the goods are transported outward in two ways:
i) Transfer of goods directly from factory to the customer i.e, direct sale of goods from factory to the customer.
ii) Transfer of goods from factory to the godowns from where the goods would be finally sold.

The credit of service tax paid may be taken only in case when the service received falls under the defination of input service.

As per the Rule 2(l) of Cenvat Credit Rules,2004 Input servies means any service used by a provider of taxable service for providing an output service; or used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, upto the place of removal;

The inward transport of raw materials directly falls under the defination of input service and the credit of inward transportation of raw material can be easily taken.

In case of outward transportation the rules w.r.t availing service tax credit has been explained in 2 parts,

i) in the 1st part when the goods are directly sold from the factory to customer and the factory itself is the place of removal, the credit cannot be taken for the outward transportation. In the defination of input services, it is specifically mentioned that input services include services used by the manufacturer for clearance of final products, upto the place of removal. As in this case, the factory itself is the place of removal, no service tax credit will be available.

ii) In the 2nd part, when the goods are transported from factory to godown from where the goods will ultimately be sold, service tax credit of outward transportation may be availed by the company as this would fall in the defination of input service.