CST on Freight

[Asked by Guest]

As Per Karnataka vat Specificity provided that any amount which is showing the bill chargeable for vat it means any freight we are charging in bill liable for VAT.

However as per CST Act any amount which is specificity showing in the bill separate from taxable value not chargeable for CST. it means CST will not be charged on freight.

Required a case law reference so we can issue reply to department.

[Ganeshan Kalyani]

In my view it will be difficult in fetching the required case law as the issue is very minor. However you can go for advance ruling if any order has not been passed so far.

[Srikanthan S]

Dear Mr Ajay Sharma,

It depends upon the clause in the contract of sale. Please refer the decision of the Supreme Court in the case of India Meters Ltd v State of Tamil Nadu reported in (2010) 34 VST 273(SC) = 2010 (9) TMI 878 - SUPREME COURT OF INDIA

Trust this would help you.

AI Summary

Tax treatment of freight charges: invoice presentation and contract terms determine VAT liability and CST exclusion.
Whether freight shown on an invoice is subject to VAT or excluded from CST turns on invoice presentation and contract terms: Karnataka VAT practice treats freight shown on the bill as VAT-taxable, whereas CST principles exclude amounts specifically shown separately from the taxable value from CST. Practically, seek an advance ruling if unresolved and consider the Supreme Court decision in India Meters Ltd and the contract of sale allocation.