Service tax implementation on importing of cargo

[Asked by Guest]

A govt. Organisation "X" (i.e. Ministry of Defence) intends to import Cargo in India which is not ment for commercial use. For that it engages an Indian Company "Y" to import the cargo on its behalf. Company "Y" further appoints company "Z" (ie. gives sub-contract) to import the Cargo. Company "Z" charters foreign Airlines to import Cargo (Foreign Airlines has no permanent establishment in India) Company "Z" makes the payment to Foreign Airlines in foreign currency against the Invoice raised by Foreign Company towards the charter of Airlines. Company "Z" raises an Invoice on Company "Y" towards Air Freight charges for importing cargo from foreign destnation to Indian destination. Company "Y" further raises an Invoice on Company "X" towards Air Freight Charges for importing the cargo from foreign destination to Indian destination. What are the service tax implementaion on Company "X", "Y" and "Z". Further any set off is avilable on the same.

[Surender Gupta]

Your question involves various issues like taxability of service of foreign airlines, taxability of services of x, y and z, question of valuation, question of reimbursement, question of availability of Cenvat Credit etc. Therefore, I feel that answer can be submitted only after detailed study and analysis of relevant documents.

AI Summary

Service tax on imported cargo chains: taxability of foreign air carriage, intermediary services, valuation, and credit entitlement.
Issues concern applicability and incidence of service tax on a multi tier importation of non commercial cargo where X engages Y, Y subcontracts to Z, and Z charters foreign airlines without a permanent establishment in India. Core questions: whether the foreign airlines' carriage and intermediary services by Z and Y are taxable in India and on whom tax is leviable; valuation and reimbursement treatment of inter company invoices; payment in foreign currency; and availability of Cenvat credit or set off. The reply indicates these are distinct legal issues requiring detailed review to determine liabilities and credit entitlement.