Service tax on ocean freight - Notification No 1/2017-ST & 3/2017-ST

[Yatin Bhopi]

Dear expert

We are manufacturer and regularly import raw material. Most of the times goods are on CIF basis and freight is paid by supplier. In January vide notification no 1/2017 ST date 12.01.2017 exemption was withdrawn for inward ocean freight. And vide Notification no 3/2017-ST dated 12.01.2017, Notification no 30/2012 ST (reverse charge) was amended and person incharge of vessel or shipping company agent liable to pay service tax .

We have received bills from shipping company (office in India) for Service tax on inward ocean freight (only service tax bill no freight. Freight is paid by foreign supplier).

Can shipping company recover only service tax charged under reverse charge basis from importer?

Or he has to utilse this payment toward service tax liability on his output services

If he has correctly charged service tax from us, whether taking CENVAT credit (without any taxable value mentioned and without any payment of freight to him is in line with law?

Please share your views.

AI Summary

Service Tax on Ocean Freight: Impact of Notification No. 1/2017-ST & 3/2017-ST on Indian Importers and CENVAT Credit. A discussion on service tax applicability on ocean freight arose following the withdrawal of exemptions via Notifications No. 1/2017-ST and 3/2017-ST. A manufacturer queried about the service tax charged by a shipping company on inward ocean freight, paid by a foreign supplier. Experts clarified that since the shipping company has an office in India, they correctly charged the service tax. The importer can take CENVAT credit as it is an input service. Amendments stipulate that the person in charge of the vessel is liable for service tax under reverse charge, impacting the cost for Indian importers.