Payment of Service Tax on Demurrage charges-Reg.

[vinay wakde]

We have our owned Barges which are given on hired. If the barge exceed free time as mentioned in the contract for loading, unloading, delivery of goods etc, we are  recovering  demurrage charges from our customers.

Kindly let us know whether the amount of demurrage recovered  from our customer  is included in the value of service provided by us & we have to pay Service Tax from 01.07.2012

Regards,

VINAY

 

[JAMES PG]

Even prior to 1.07.12, it is taxable since it is a part of hire charges.

[YAGAY andSUN]

Since Demmurrage charges, are not being included in the assessable value for calculation of customs duty, hence, it is required to pay the service tax on such charges.

AI Summary

Demurrage charges as part of hire charges deemed taxable service, requiring service tax on recovery under service tax law. Demurrage charged for excess occupation of hired barges is characterised as part of the hire charges and therefore forms part of the assessable value of the service for service tax purposes; the distinction that demurrage may be excluded from customs assessable value does not remove it from the service tax base when recovered from the customer.