SERVICE TAX PAID ON FREIGHT OUTWARD

[Kusalava InternationalLimited]

We paid Service tax on Freight Outward(RCM).Can we claim input credit of that Service Tax?Pls clarify with any Notfication/Circular.

[DR.MARIAPPAN GOVINDARAJAN]

Whether you want to claim input credit in GST regime?

[KASTURI SETHI]

Yes. Allowed. Up to the place of removal outward freight was treated as inwards freight. go through the following circular and case law. See Para No.8.1(c) of Master Circular No.97/8/2007 dated 23.8.2007 issued under Board's File No.137/85/2007-CX.4 read with case law reported as 2009 (236) E.L.T. 431 (P & H) = 2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT in the case of .AMBUJA CEMENTS LTD.Vs. UNION OF INDIAdecided by Punjab & Haryana High Court at Chandigarh. Hon'ble Court has held as under:-

"Cenvat credit of Service Tax as input service on Goods Transport Agency service is admissible on the premise if ownership of goods remain with seller till delivery at customer’s doorstep, transit insurance borne by appellant and property in goods not transferred to buyer till delivery, freight charges forming part of value of excisable goods and borne by appellant as sale on FOR destination basis – the credit admissible on outward transportation upto place of removal, defined as input service, if all three conditions are satisfied."

There are so many case laws on this issue.

 

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Sri Sethi

[Kusalava InternationalLimited]

Thanks for Valuable replies Sir.

[Ganeshan Kalyani]

Yes, the credit of service tax on outward freight is eligible as per the citation quoted in Sri Kasturi Sir's reply.

AI Summary

Input credit on outward freight allowed when freight is seller borne and ownership remains with seller until delivery. Service tax on outward freight qualifies as Cenvat/input credit up to the place of removal where the freight operates as an input service and three conditions are met: ownership of goods remains with the seller until delivery (FOR destination), transit insurance is borne by the seller, and freight charges form part of the value of the goods and are borne by the seller.