Service tax on Export Ocean Freight

[KIRAN KUMAR]

Dear Sir,

For 2015-16 we exported Exempted products to Out side india and paid Ocean Freight to Liner. Kindly provide the Service tax liabulity on GTA with Notification Number

Regards,

Kiran Kumar

[DR.MARIAPPAN GOVINDARAJAN]

Now we have entered into GST regime. Now you have asked the query. If there is a problem?

[KIRAN KUMAR]

Dear Sir,

Service tax assessment fy 2015-16 Department person served Notice to us to pay the Service tax on Export Ocean freight

Requesting you to provide the rules

Regards,

Kiran Kumar

[Rajagopalan Ranganathan]

Sir,

As per para 2 of Circular No. 197/7/2016-S.T., dated 12-8-2016 issued from F.No. 137/54/2016-Service Tax-Part-I

" in terms of rule 10 of the Place of Provision of Services Rules 2012, (hereinafter referred to as 'POPS Rules, 2012', for brevity) the place of provision of the service of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods. It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory and hence not liable to service tax."

In view of the above the demand issued by the department demanding service tax on ocean freight paid for exporting goods from India to a place outside India is contrary to law and the same may be contested.

[KASTURI SETHI]

Sir,. Crystal clear reply by you. You have enriched my knowledge. Thanks a lot.

[KIRAN KUMAR]

Sir Thank you very much for your Reply

[Rajagopalan Ranganathan]

Dear Kasturi Sir,

thank you for your appreciation.

[DR.MARIAPPAN GOVINDARAJAN]

When the query is clear correct solution can be given.

AI Summary

Place of provision for international ocean freight is the destination, so outbound ocean freight services are not taxable.
Place of provision for transportation of goods by sea to a place outside India is the destination; therefore ocean freight for exports is regarded as supplied outside the taxable territory and is not liable to service tax. A departmental demand for service tax on such export ocean freight is contrary to this place-of-provision principle and may be contested on that basis.