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Service Tax Liability (E-commerce transaction scenario)
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....ervice Tax Liability (E-commerce transaction scenario)<br> Query (Issue) Started By: - Pallav Singh Dated:- 5-1-2016 Last Reply Date:- 7-1-2016 Service Tax<br>Got 3 Replies<br>Service Tax<br>Dear Sirs, There are four companies in discussion - "S" is Supplier,; "C" is Customer, "P" is e-commerce portal and "T" is transporter.The arrangement is B2B and is exp....
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....lained as - * Customer "C" orders material on the e-commerce portal of company "P" to Supplier "S". * The e-commerce portal "P" has taken responsibility to service the order and has got into agreement with transporter "T" to pick the material from "S" warehouse and deliver to location of "C" by road. * The transporter &qu....
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....ot;T" will raise freight charges invoice on e-commerce company"P"(Say freight charge is ₹ 90/-) * E-commerce company "P" raises an invoice to the Supplier "S" mentioning freight charges component as ₹ 100/- (i.e mark up of ₹ 10/- is there in freight charges) along with payment of material cost as agreed between "P" and "S".....
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.... As per Reverse Charge Mechanism, for Point 3 above, where Transporter "T", a GTA, is providing transportation services to E-commerce company "P" and freight charge is paid by "P". In this scenario, liability of S.Tax payment lies on "P". ie 4.35% of the freight value (4.35% of ₹ 90/-). Questions: * Now "P" an e-commerce company is char....
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....ging freight to supplier "S" as ₹ 100/- instead of ₹ 90/-. In this scenario, who is liable to pay Service tax on transportation (freight value ₹ 100/-). Can "P" pay the S.tax to the department. * Say, If "P" pays the S.Tax for the scenario in Question 1, then what is the net liability of "P" on service tax considering input and output ser....
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....vice tax. * What is the service tax liability of all four parties involved in the above arrangement. Request your valuable suggestions and advise. Regards, Pallav Singh Reply By Ganeshan Kalyani: The Reply: Freight should be paid by 'P' as transporter is getting payment from 'P'. Further since it is buying and selling activity there is no service tax liability . Reply By Pallav Singh: The Re....
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....ply: Thank you Ganeshan Kalyani...I am clear now that since "T" (a GTA) is providing transportation services to "P" hence the service tax liability lies on "P" as per reverse charge mechanism. But It may be noted that "P" is marking up the freight value ( from ₹ 90 paid to Transporter "T" to ₹ 100/-). He is charging ₹ 100/- for....
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.... transportation of material of Supplier "S" but not as a GTA. Sale transaction of material is clear and is not under the ambit of S.Tax. But the transportation services rendered by "P" to "S" is a Service (though indirectly through transporter "T"). Hence the question no 1 and 2. Thanks and request your valuable advise. Regards, Pallav Reply By Ganeshan....
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.... Kalyani: The Reply: 'P' is recovering the freight so paid to 'T' from'S' under the heading GTA with profit therfore it will also attract service tax.<br> Discussion Forum - Knowledge Sharing ....