Whether Demurrage attracts Service tax

[Shyam Naik]

Dear Experts,

Whether demurrage charges collected/charged by service provider attracts service Tax?

For example, A GTA may charge demurrage(also known as detention charge) over and above the freight in case there is delay in loading or unloading. Here freight is undobutedly consideration for service provided, where as demurrage is penal/compensatory in nature.

Kindly opine.

Regards,

 

SL Naik

AI Summary

Is Demurrage Subject to Service Tax? Forum Debates Whether Charges by GTAs Are Taxable or Penal A discussion forum addresses whether demurrage charges attract service tax. The original query questions if demurrage, charged by a Goods Transport Agency (GTA) for delays in loading or unloading, is subject to service tax. One response suggests that if demurrage is considered freight, service tax applies. Another argues that demurrage is penal and not part of transport services, thus not taxable. A reference is made to a circular clarifying that detention charges are penal rent, not a service, and therefore not subject to service tax. The discussion also includes a clarification on service tax for delayed payment charges in stock brokerage.