CENVAT CREDIT ON CARRIAGE INWARD

[Guest]

DEAR SIR,

 

A CARGO COMPANY IS CHARGING US SERIVE TAX ON THE FREIGHT OF MATERIAL. ie if the bill is of rs 5000/- he is charging us 618 ST. Can we get the the credit of Rs 618 or 25 % of the it.

Regards

 

Rohit R Rao

[YAGAY andSUN]

Yes, you may avail the CENVAT credit on the inward freight but the question is why the Cargo Company is charging the Service Tax on the freight amount.  You are paying the freight and you are liable to pay the service tax accordingly in cash.

[CASeetharaman KC]

Reverse charge mechanism specified under Notification 30/2012 dated 20-06-2012 shall apply in case of :

Goods Transport provided or agreed to be provided  by a goods transport agency in respect of  transportation  of goods by road, where the  person liable to pay freight    is,—

            (a)  any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

            (b)  any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

            (c)  any co-operative society established by or under any law;

            (d)  any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

            (e)  any body corporate established, by or under any law; or

            (f)  any partnership firm whether registered or not under any law including association of persons;

Assuming that you fall in one of these categories stated above, the Service tax has to be paid in cash by your organisation and then only you can take CENVAT on the basis of the challan making such payment

[JAMES PG]

If the said cargo company is not a Goods Transport Agency, reverse charge will not be applicable. In case of end to end logistic service provider, they may charge ST @12.36% on the total freight amount and the recipient can avail Cenvat credit subject to the eligibility as per CCR. If the Cargo Co is merely a GTA, they are not supposed to charge ST and the recipient of service is legally bound to pay ST under  reverse charge mechanism

AI Summary

Reverse charge on goods transport services requires recipient to pay service tax in cash before availing Cenvat credit. Cenvat credit on inward freight is available where the service tax liability is lawfully discharged. Reverse charge under Notification 30/2012 applies to road goods transport for listed recipient classes, requiring the recipient to pay tax in cash and take credit on the challan. If an end to end logistics provider charges tax, the recipient may claim credit subject to CCR eligibility; if a GTA does not charge tax, the recipient may be liable under reverse charge. Documentary proof of payment or invoice is necessary to support Cenvat claims.