Service Tax on Air Freight Charges

[RAJENDRA KHOMNE]

Dear Sir, Good Morning,

We have purchase imported material from dealer and he charged Air Freight charges in bill. Our query is, Is Service Tax Reverse Charges Mechanism applicable for Air Freight Charges? Pl guide.

Thanks,

Khomne R. M.

YESHSHREE PRESS COMPS PVT. LTD.

[Rajagopalan Ranganathan]

Sir,

Reverse charge mechanism applies only to Goods Transport Agency Service. It is not applicable to Air Freight Charges.

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir. Air freight service is not enumberated in the reverse charge notification no. 30/2012-ST and hence not liable to pay service tax under reverse charge basis.Thanks.

[KASTURI SETHI]

Sh.Rajendra Khomne Ji,

Agreed with both experts but I would like to add as under :-

You are not direct in picture. Had the importer paid ST he would have charged in the bill and you would have forwarded the same to your buyer.

Serial No.10 of Notification No.30/12-ST dated 20.6.12 (as amended) cannot be brushed aside. Since you are experienced and knowledgeable person, no need to explain implication/intricacies of this serial no.

AI Summary

Reverse charge mechanism: not applicable to air freight charges; air freight is excluded from reverse charge service tax treatment. The reverse charge mechanism is confined to services explicitly notified for reverse charge and does not apply to air freight service because air freight is not listed in the reverse charge notification; consequently recipients are not required to pay service tax on air freight under reverse charge, with tax on air freight remaining the supplier's charge and passed through in billing.