We are manufacturer. We regularly import our raw material from various countries. Normally terms are FOB at loading port.
We pay the freight to shipping line company (in $ USD) and insurance to Insurance company from loading port to Indian port .
Are we liable to pay service tax on reverse charge basis on freight paid to shipping line company?
Manufacturers Not Liable for Service Tax on Ocean Freight Under Reverse Charge, Covered by Section 66D of Finance Act 1994. A manufacturer inquires about the liability of paying service tax on ocean freight under the reverse charge mechanism for freight paid to a shipping line company. Four responses clarify that service tax is not applicable. Pawan Kumar and Rajagopalan Ranganathan explain that ocean freight is not liable under the reverse charge mechanism and is included in the negative list under Section 66D (p) (ii) of the Finance Act, 1994. Pradeep Khatri adds that sea freight for goods from outside India to the first customs station is not taxable. Arun Kumar Singh notes that if freight charges are paid separately, service tax is not applicable. (AI Summary)
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