Stevedoring & Transport Services

[Praveen Kumar]

1. M/s XYZ Pvt Ltd a service provider does stevedoring services (unloading of coal from ship to dockyard) and also does transport services (transport of coal from yard to customer place). M/s XYZ Pvt Ltd doesnt import coal.It only does stevedoring and transport.

2. XYZ Pvt Ltd engages a GTA to transport coal (as XYZ doesnt own trucks). It pays ST on reverse charge.

3. It Invoices transport charges to its customer ABC pvt ltd to whom the coal is to be transported. Should ST be charged by XYZ Pvt Ltd or should it be paid by ABC pvt ltd under Reverse Charge Mechanism considering XYZ Pvt Ltd as a GTA. ?

4. If ST is to be paid by XYZ Pvt Ltd and not under Reverse Charge will Cenvat Credit of Service tax paid under reverse charge By ABC Pvt Ltd be availabe to ABC Pvt Ltd.

[Ganeshan Kalyani]

the service tax liability under reverse charge falls on assesse paying freight. If your client company pays freight then the liability of service tax would have been on them. also it depends on agreemenT between you and your client about freight. secondly for cenvat credit you are eligible to claim credit as it has direct nexus with you output taxable service. the credit can be taken based on tax paid challan.

AI Summary

Reverse charge liability: party paying freight bears service tax; cenvat credit available to recipient based on tax paid challan.
Liability for service tax under the reverse charge falls on the party paying freight; contractual allocation of freight determines who is liable. If service tax is paid under reverse charge by the freight-paying party, that party may claim Cenvat credit where the tax paid has direct nexus with its output taxable service and credit is taken based on the tax-paid challan.