Service Tax Charged on the Transportation cost

[Asked by Guest]

Dear All,

We have bought a machinery, In the invoice supplier is being charged Machinery cost Plus Vat  &

Transportation cost  Plus service tax thereon.

My question is that can he charged service tax on transportation cost in the invoice? 

[YAGAY and SUN]

No, your supplier is not authorised to charge the service tax on GTA services on the face of an Invoice.  Under GTA services whoevers pay the freight amount, is liable to pay the service tax.

[NEERAJ KUMAR, RANCHI]

Kindly check if the supplier has charged only transportation charges or transportation charges plus service tax. As Mr khatri has correctly suggested that he can not charge service tax from you. But yes, he can charge transportation charges, if the place of removal of goods is not factory gate but your premises, then as per transactional value  it is correct to add transportation charges in assessable value and to charge central excise duty over that amount. But after charging c ex duty he can not charge transportaion charges additionally and in no case he can charge s. tax

[RadheyShyam Mangal]

Only possibility of charging transportation and service tax can be a situation when the supplier has paid freight on your behalf . If the delivery terms are of FOR, then Excise Duty may have to be paid on a value after adding transportation cost.

AI Summary

Service tax on transportation: supplier generally cannot charge it on the invoice; the freight payer bears liability.
The supplier is not authorised to charge service tax on GTA services on the face of an invoice; liability for GTA service tax lies with the party who pays the freight. Transportation charges may nevertheless be added to transaction value for central excise where removal is to the buyer's premises or delivery terms are FOR, and excise duty may be computed after adding those transport costs. A supplier paying freight on the buyer's behalf may explain entries but cannot validly pass on GTA service tax as an invoice charge when the freight payer is liable.