Freight Charges include in Assessable Value

[SNEHAL SHAH]

R/sir,

We are the engineering manufacturing Company name XYZ LTD . Our group product is Enginnering . We are calculate & prepare Invoice as per below break up :

Total Order Value is Rs.100=00

Rs.50=00 Finished Goods Material Value which was despatch with  Excise Invoice to ABC LTD .

Rs.25=00 Transportation bill prepared XYZ LTD. ( SELF ) & send it party & Service tax paid on this.

Rs.25=00 Errection and commissioning bil prepared XYZ LTD. (SELF) & send it to party and pay Service tax .

Total Order Value complet = Rs.100=00

Now question is that we have already prepared bill and paid tax as above .

But Audit objection is that , when we have arrrange vehicle through tranporter tranport expense is only Rs.20/- instead of Rs.25/- .

Excise Auditor raise point that u can save Rs.5/- as a income and your liability to pay service tax .

Sir , I am confused for this matter please guide and give your expert advise is it service tax liability on Income or profit of the organisation ?

Also guide is it corret way of billing system as per shown above ?

If not corret please guide correct way .

With regards,

SNEHAL SHAH

AI Summary

Engineering Firm's Billing Method Valid; No Extra Service Tax on Transportation Income An engineering manufacturing company, XYZ LTD, raised a query regarding service tax liability on transportation charges. They billed Rs. 25 for transportation but incurred only Rs. 20, leading to an audit objection suggesting a Rs. 5 income. XYZ LTD sought advice on whether this income is subject to service tax and if their billing method was correct. Responses indicated that since service tax was paid on the full Rs. 25, there is no additional tax liability. The freight charge on the invoice does not need to match actual costs, supported by legal precedents. The company was advised that their approach was correct.