Service Tax on GTA outward

[Asked by Guest]

Dear Expert

Can we take service tax on outward GTA? All sales done on FOR basis (Freight & insurance including in basic Price).

[JSW CEMENTLIMITED]

You have to ascertain as to whether the ownership of goods lies with you till delivery of goods to customer at his premises. If so, then you can avail cenvat credit on outward transport on the premise that the place of removal is the buyer's place where sales take place.

regards,

V.Venkat Raman

[kutub sheikh]

Dear Sir V.Venkat Raman

Plz let me know what are the condition for ascertaining the owner of goods. plz do reply

Thanks & Regards

[YASHAVANTH RM]

You can avail credit but cannot be utilize till dispatch of goods, Also it should be accountable manner to prove not utilized.

[JSW CEMENTLIMITED]

Dear Mr. Singh,

Your contract would speak every thing. If the contract made is for FOR destination and freight, insurance every thing is in your scope, you have to deliver the product in good acceptable condition at customers premises, you satisfy the provisions of Section 25 of The Sale of Goods Act, 1930, i.e. till delivery you reserve to right to dispose off the goods, the place of delivery shall be the place of removal as sale take place at the place of delivery, then service tax paid on such outward freight shall be eligible for you. If the sale take place at your factory gate i.e. the buyer places his carrier or you arrange carrier on behalf of your buyer and you do not have any right of disposal of goods once you have delivered the goods to carriage, in such case place of removal shall be your factory gate and you will not be eligible for service tax paid beyond your place of removal.

Regards,

V.Venkat Raman

[Srikanthan S]

I once again request the learned members to clarify whether it would be necessary to sync the Revenue Recognition Statement in the case of companies. If the sale revenue is recognized immediately upon billing the goods (though the freight and insurance charges are borne by the consignor for delivery @ the purchaser's premises which means that 'substantial risks attached to ownership are transferred @ the purchaser's premises upon delivery), will it not contradict? In such cases, do we have to wait till delivery is completed at the purchaser's end and show proof? Moreover, is it required to state on the face of Invoices that the sale is on F.O.R.destination basis in the absence of a written agreement between the parties?

Looking forward to feedback...

Srikanthan

[PARTHASARATHY V]

Revenue recognition is irrelevant for availment of cenvat credit. It will be based on the GTA LR and payment of ST Under RCM.

AI Summary

Service tax on outward transport: cenvat credit hinges on place of removal and retention of ownership until delivery.
Eligibility for cenvat credit on service tax for outward transportation depends on whether the seller retains ownership or the right to dispose until delivery and thus whether the place of removal is the buyer's premises; where FOR destination terms apply and ownership is retained until delivery, service tax on outward freight is creditable, whereas if disposal passes at the seller's premises the place of removal is the seller's premises and transport tax beyond that point is not creditable.