Service tax credit on courier charges

[Swapneswar muduli]

Dear Experts,

Should we eligible for service tax credit on Courier charges for document send t & Material send to various location from our Factory.

Regards

Swapneswar Muduli

[KASTURI SETHI]

Yes. If you can establish Nexus between input service and output service and in relation to manufacture of dutiable goods.

[Rajagopalan Ranganathan]

Sir,

If courier charges incurred for sending documents are in the nature of service in relation to sales promotion you are eligible to avail the credit. In respect of goods, if the contract between you and your buyer is on the condition that the goods are to be delivered at the door steps of your buyer and ownership of the goods is passed on to your buyer only at his door steps. In this case the 'place of removal' will be the buyer's place.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir and Sri Rajagopalan Sir. The nexus between input service with the manufacturing of excisable goods is essential for taking credit.Thanks.

[Himansu Sekhar]

1. Courier charges: credit is eligible if the courier is for the documents

2. Courier charges: if the materials sent, if the value is included in the assessable value, then the credit is eligible. If you charge the courier charges as extra amount, credit is not eligible.

[Ganeshan Kalyani]

Sri Himansu Ji, please clarify point no 2 of your recent reply.

[KASTURI SETHI]

Outward courier charges cannot be in relation to manufacture of goods. Sh. Himanshu ji is hinting towards the transportation charges up to place of removal. If place of removal is buyer's doorstep, then credit is admissible. He wants to express like this. Am I right ?

[Himansu Sekhar]

You are correct sir. As per the master circular on service tax , to determine the eligibility of credit up to the point of removal, the value of outward freight should be included in the assessable value charged to duty. Otherwise as per rule 2(l) of CCR all the services beyond the place of removal are not eligible services for credit. It may be courier or other services.

[KASTURI SETHI]

Yes. Courier charges are also transportation charges. It is actually freight.

[Himansu Sekhar]

It emerges that credit will not be available if the courier charges are charged extra.

[Himansu Sekhar]

Charged extra means value is not inclusive of such charges.