Service Tax Input credit on GTA outward

[Vinay Sharma]

Dear Sir,

Please let us know if Service Tax paid for GTA service for Freight Out Ward on final products is eligible for taking Cenvat Credti uder Excise.

As per definition of Input service the expenses for clearance of final products upto the place of removal are to be treated as input service.

Please clarify.

Thanks  & Regards

 

 

 

[A Wilson]

Dear Sir,

As per My View, You are not eligible for taking CENVAT Credit of Service tax Paid under GTA to discharge the Excise duty on Removal of Goods Manufactured.

Two Options are there:

• if you can able to issue a Separate Service Invoice(With Service tax at the rate of 12.36 percent ) for the Freight Recovery from the Customer, you may utilize the Service tax Paid under GTA (Service tax at the rate of 3.09 percent after abatement) to discharge the service tax(12.36 percent ) collected from the Customer.

• Otherwise you may include the Service tax paid at the rate of 3.09 percent on Outward freight in the Cost of the Goods(If possible)

Thanks & Regards,

A.Wilson

 

 

[Vinay Sharma]

Dear Sir,

thanks for your reply.

I would further clarity that Sales orders received from our customers are on FOR basis. i.e freight upto buyers destination is to be paid and borne by us. Freight is included in price hence seperatelynot shown in our invoice.

In such a scenario are we eligible to avail credit in respect of Service TAx paid on GTA by us under reverse charge at the rate of 3.09 percent .

Regards

[A Wilson]

Dear Sir,

As per my view, you cannot take credit of service tax as the Input service definition does not allow you to take credit. 

The only option is, while including the Freight Cost in the Price you may add this service tax also

(service tax at the rate of 3.09 percent on Freight)

(eg) - If the freight cost is Rs.10 Per Unit then you may add the freight cost in the price as Rs.10.31 Per Unit.

Thanks & Regards,

A.Wilson

[RAMNIRANJAN KANDOI]

According to me if you are able to meet the requirement of Circular no.97/2007 of CBEC(Para 8.2)& if you pay excise duty on freight amount included in the price & also pay service tax on freight incurred than one can take credit of service tax paid.

[ANISH PARASHAR]

In terms of Board's circular 97/2007 S.T, for a   manufacturer /consignor, the eligibility to avail   credit of the service tax paid on the transportation during removal of excisable goods would  depend upon the place of removal as per the definition.  In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are   sold, after their clearance from the factory), the determination of the ‘place of removal’ does not pose much problem. However, there may be situations where the manufacturer /consignor may claim that the sale has taken  place at  the destination point because in terms of the sale contract /agreement (i) the ownership of goods and the     property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place.  

AI Summary

Cenvat credit eligibility for GTA freight depends on place of removal and whether freight is separately invoiced or included in price. Cenvat credit of service tax on GTA outward freight depends on the transportation qualifying as an input service tied to the place of removal; separate service invoicing and recovery from the buyer allows set off, whereas when freight is included in a FOR sale credit is generally unavailable unless transfer of property, allocation of risk, and inclusion of freight in the price establish the place of sale at destination, in which case credit may be admissible.