Fuel - cost of freight

[nitesh chadha]

There is a fuel surcharge in percentage basis on every International Courier parcel or Document booked from India. Is this surcharge part of the total cost of freight so that service tax will be charged on total of freight cost + fuel surcharge or fuel surcharge is a misscellaneous expense and is exclusive from service tax charge ?

[Ravi Chopra]

The gross amount received from the client / customer is liable to service tax under section 67 (valuation). Fuel surcharge is the indirect cost upon the event should be included into the value of taxable services.

AI Summary

Taxable value inclusion of fuel surcharge: fuel surcharge must form part of freight for service tax valuation. The fuel surcharge charged on international courier consignments is an indirect cost forming part of the gross consideration for the courier service and must be included in the taxable value; service tax therefore applies to the combined freight and fuel surcharge rather than excluding the surcharge as a miscellaneous expense.