GTA SERVICE TAX CREDIT ADMISSIBILITY ON OUTWARD FREIGHT

[Guest]

Dear Sir,

Please explain regarding Service tax credit admissibility on outward freight under following circumstances 1) In the case of clearance of finished goods from the factory to the customers in such case whether we as a manufacturer has paid service tax under reverse charge can avail cenvat credit of such outward freight. 2) In the case of clearance of goods to depot which is not registered under excise whether we can avail such credit in such situation also, Please explain, Please give us any references regarding this.Thanks & regards.

[JSW CEMENTLIMITED]

If, you contract term is FOR destination i.e. the ownership of goods lies with you even after clearance from the factory and the sale is taking place only at the Buyer's premises, the place of removal being buyer's premises, service tax credit on outward transportation can be availed other wise NO.

In respect of your second query, if the place of removal is depot, irrespective of its registration, SErvice tax credit on outward transportation can be availed.

[Srikanthan S]

Availing GTA service tax credit on outward freight needs to be in sync with the Revenue Recognition Policy of the company. In many industries, where the goods are despatched to a large number of Distributors from the C&F Agents, though the transportation charges and transit risks are borne by the consignor, if the sale revenue is recognized soon upon billing, availing GTA service tax credit is fraught with risks. Seek experts opinion on this.

[Mukul Ved]

Now in this Budget point of clearance is defined as factory gate and I doubt at present Service Tax on outward is admissible except in case of depot sale

AI Summary

GTA service tax credit admissibility hinges on place of removal; depot sales preserve credit while factory gate removals may not. Cenvat credit for GTA service tax on outward freight depends on the contractually defined place of removal: FOR destination removals where ownership and sale complete at the buyer's premises permit credit, whereas factory-gate removals do not. Credit to depots is admissible irrespective of depot excise registration. Revenue recognition practices and a budgetary shift defining clearance at the factory gate may restrict outward freight credit outside depot-sale situations.