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 In January vide notification no 1/2017 ST date 12.01.2017 exemption was withdrawn for inward ocean freight.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

Reverse charge liability for imported ocean freight now falls on the person in charge of the vessel, affecting input credit.
Services by way of transportation of goods by a vessel up to the customs station of clearance are now taxable after withdrawal of the exemption, and amendments introduce a reverse charge mechanism making the person in India who complies with customs filing obligations (including the person in charge of the vessel or their agent) liable to pay service tax on the full taxable value. Where an Indian establishment of the provider exists, the provider may charge service tax; otherwise the notified person pays and may recover the tax, with corresponding effects on customs assessable value and potential non availability of CENVAT credit.