Detention Charges

[Mridul Sethi]

Sir,

Is veh.detention charges chargeable to service tax or not.

Regards,

Mridul Sethi

[YAGAY and SUN]

No, it would not included in the taxable amount since it is in compensatory nature.

[Mridul Sethi]

So, Pls clear me that :- amount of compensatory nature is taxed or not, because it is the income of service provider.

[YAGAY and SUN]

I had read either a case law or a clarification pertaining to your query but not able to recall my memory that where I had read about this.  But I'm damn sure it is not includible.

Please discuss it with your consultant and refer the mega notification or negative list.

[rishi mohan]

There is no service tax applicable on "Detention charges", the same should be claimed specifically and separately in the invoice, rather than clubbing in gross amount claimed for broking services.

As far as my knwlege , all services are taxable except services provided in teh nagative list or exempted list. Hence service tax should be appliable on detention charges.

If some body has any notification or circular, pl update. 

AI Summary

Compensatory detention charges may be excluded from taxable value, subject to classification under service tax negative or exempt lists.
Whether detention charges attract service tax depends on their characterisation as compensation versus consideration for a taxable service. Contributors generally treat detention charges of a compensatory nature as not includible in taxable value and advise segregating such amounts on invoices; others caution that services are taxable unless excluded by the negative list and recommend consulting notifications or a tax consultant.