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Service tax

nitin suvarna (C.A FINAL) (828 Points)

27 December 2011

i wanted a confirmation on one query. when a ship is given on charter hire ,service tax is leviable under the service "supply of tangible goods for use", but when such ship is being used for transportation of some goods accordingly no service tax should be levied .

i require a confirmation from u friends,please reply!

regards,

nitin s.

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CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 27 December 2011

A charter agreement, what I understand, is an agreement for hiring a vessel or a part of the vessel for conveyance of goods or passangers. It is the contract between the owner of a vessel and the charterer for the use of a vessel. No matter what the size is, but Ships are tangible goods. Where there is a Charter Party agreement, the charterer has exclusive right to use a vessel or specific place on it. Hence it amounts to supply of tangible goods for use.

It's not always true that when ship is being used for transportation of goods no service tax should be levied. To my knowledge in case of transport of coastal goods, service tax is levied.

Please mention the provisions, if any, for non levy of service tax on transportation through ship.

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nitin suvarna (C.A FINAL) (828 Points)
Replied 28 December 2011

hi ....

i am doing a audit for a shipping co which transports jumbo bags,cement ,corase sand,steeel bars, stones in jumbo bags,general cargo etc.They have not charged serviec tax on the same . so, could you tell what falls within the defintion of "coastal goods" & whether the co is correct or not.

regards,

nitin.

nitin suvarna (C.A FINAL) (828 Points)
Replied 28 December 2011

Also my request by a p.m was for this query only so thanks for ur reply & hoping for a new reply soon....................

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 28 December 2011

As per (Section 2 (7) of Customs Act, 1962), “Coastal goods” means goods, other than imported goods, transported in a vessel from one port in India to another.

In my opinion, where goods are transported outside india, the same shall be deemed to be export of service and hence Service Tax would not be leviable.

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