Applicability of service tax

[Narasimha Subramanian]

We are importing goods from various countries using various MNC Freight forwarders. We found that our freight forwarder is not charging us service tax on the freight amount and origin charges in his invoice. Now, the service tax dept have asked us to pay the service tax on the same stating it was our responsibility to pay the same. What should be our stand as we were under the impression that it was applicable only for unorganized GTA's who did not have systems to charge service tax and not for organized GTA's. The invoice from our freight forwarder also did not have a line that he has not paid the ST and we were liable to pay. What should we do on the same?

[Surender Gupta]

In case of GTA service charged by the Freight forwarders in Invoice, you are liable to pay service tax only in case, he is making payment to GTA on your behalf as pure agent. Otherwise, it is the liability of the freight forwarder to pay service tax on GTA service.

AI Summary

Service tax liability on freight: importer liable only if forwarder acted as pure agent and paid GTA on importer's behalf. Where a freight forwarder invoices GTA services to an importer, the importer is liable for service tax only if the forwarder paid the GTA on the importer's behalf as a pure agent; where the forwarder supplies or bills GTA services in its capacity as service provider, the forwarder is liable for service tax. Invoice wording alone does not determine liability; the key is whether the forwarder acted as a pure agent and made payment to the GTA on the importer's behalf.