Outward Freight Income and Expenditure Taxable

[Ramesh M]

Dear Experts,

We received Ex works order from customer, after wards customer requested us to engage a transporter on behalf of us to deliver goods at our premises and also confirmed to pay 5,00,000/- towards freight charges to us, in turn we need to pay the same to transporter who engaged the vehicle to deliver goods. In this transaction I request you to give advice on following clarifications :

1) Transporter charging to us for 5,00,000/-

a) Service Tax applicable ? who has to pay ?

2) Same amount we are claiming from customer through invoice

a) Service Tax Applicable ? who has to pay

3) If i am paid already service tax on Transporter bill, again we need to pay against collected from customer ???

Ramesh

[Ganeshan Kalyani]

Service tax on GTA lies on tge person who pays freight. getting the cost reimbursed from customer does not shift the liability on them. If the transporter has raised consignment note in your name then it is evident that you should discharge service tax under reverse.

AI Summary

Service tax on freight: liability rests with the person who pays freight; reimbursement does not transfer liability. Liability for service tax on Goods Transport Agency services rests on the person who pays the freight; reimbursing that cost from a customer does not transfer liability. If transport documentation or consignment note is issued in the supplier's name and the supplier is the payor, the supplier must discharge tax under the reverse charge mechanism, and recovering freight from the customer does not relieve that obligation.