Credit of service tax charged by airway agency

[pardeep bisht]

X is a manufacturing unit and dispatch F.G. to his customer Y and charges the freight in the invoice along with service tax(@2.575%)and deposit the same to Govt. accordingly, but for delivering the material X use airway service and airway agency charge alongwith service tax from X. Does credit of service tax charge by airway agency is allowed. Please clarify.

AI Summary

Debate on Service Tax Credit: Can Manufacturing Units Claim Credit on Outward Freight? Conflicting Opinions Highlight Recent Judgments. X, a manufacturing unit, dispatches finished goods to customer Y, charging freight and service tax, which is then deposited with the government. X uses an airway service for delivery and is charged service tax by the airway agency. The query is whether X can claim a credit for this service tax. Mukesh Kumar replies that credit on outward transportation is not allowed, while Shankar Patil cites recent judgments indicating that credit on outward freight is permissible, referencing several legal cases involving cement companies and excise commissioners.