VAT ON FREIGHT CHARGES -ANDHRA PRADESH

[ramisetti jagadeeswararao]

Dear sir,

my query is that, in Andhra Pradesh Sales made under VAT( with in the state of AP), if we charges freight charges in the invoice (outsiders trucks), it will be treated as part and parcel of sales, VAT is chargeable on freight charges also, but the freight charges are not our income or expenditure and the same freight charges what we collect from the customers is 100% payable to truck owners.

when the freight charges are not our income why it should be taxable.

At the same time if do not add the freight charges in the invoice, but a debit will be raised

on customers towards freight charges, in such case also VAT is chargeable or not.please clarify.

[Rama Krishana]

I found an answer to similar query by Mr. Pradeep Khati to issue ID-4230

In the reply, the provisions of Section 2(29) of the AP VAT has been discussed. A careful reading of the section 2(29) leaves very little scope for ambiguity. And therefore, it cannot be the situation that mere by including the amount of freight in the Invoice or raising a separate debit note would alter the tax liability.

Whether amount of freight is to be included or not is a question that may be challenged before the courts of law, but by raising separate debit note itself cannot provide any relief from the sales tax liability.

AI Summary

Taxability of freight charges treated as part of taxable sale; separate debit note does not avoid VAT liability. Freight charged to customers is treated as part of taxable sale under the applicable VAT definition of turnover; showing freight in the invoice or as a separate debit note does not alter its tax character, and raising a separate debit note alone will not relieve VAT liability, though the exclusion of freight from taxable turnover may be subject to challenge on legal grounds.