Service tax Liability when freight include supply bill

[Guest]

Dear Experts,

kindly guide

there is a Vender/supplier who include freight charges into bill (exclude service tax) of supply. kindly guide can service receiver / consignee be liable to pay service tax or not. mostly service tax (GTA) liability bear by a organisation who pay for transporter.

Regard

Vikram

[KASTURI SETHI]

You are liable to pay service tax.

[Suryanarayana Sathineni]

Dear Friend,

In the trade different practices are in place. One such practice is Consignor pays the freight and includes in the invoice value including ST. This might be because of the Purchase order terms.

In case , if you are eligible for such Service tax paid on the freight, then it is advised to change the Purchase Order terms and ask the supplier to book the consignments on freight "to pay 'basis.

Best Regards

S Suryanarayana

[Ganeshan Kalyani]

The supplier has charged freight on sale invoice. This means that the supplier would have paid freight to the transporter and is now recovering the same from the purchaser. In this case supplier is supposed to pay service tax as he has paid freight amount.

If the supplier is just arranging for the transport then he is not supposed to charge freight on invoice. Instead he should write as to pay basis and then the transporter will issue consignment note in the name of purchaser and purchaser will make the freight payment. And freight will be paid by purchaser.

Based on the above para querist should check the actual background as to who is going to pay freight. Thanks.

[Guest]

Thanks to all.

It is observed that service tax will be pay by consigner when they pay for transporter.

please revert, if I am not correct.

Regard

Vikram

[Ganeshan Kalyani]

No you are not wrong.

[KASTURI SETHI]

I agree with Sh.Ganesh Kalyani, Sir. In simple words, who pays the freight should pay Service Tax whether consignee or consignor. A lot of discussion has already been done on this issue in this forum. So no need to further elaborate.

[Guest]

Thanks a lot KASTURI SETHI, & Ganeshan Kalyani

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AI Summary

Service tax liability: the party who pays the transporter for freight bears the tax on freight services. Service tax on freight depends on who pays the transporter: if the supplier pays the transporter and recovers freight in the invoice, the supplier bears the service tax; if the purchaser pays the transporter on a to pay basis, the purchaser bears the service tax. Contractual/payment arrangements and documentary evidence determine which party is the tax payer.