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Service tax on ocean freight-on import export transportation of goods …

Dear Experts,

Service tax has been introduced on inward & outward transportation of goods by Sea. Kindly confirm Is service tax now payable on Ocean freight paid to shipping and air lines ??

Post Reply [1]

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Dear TMI Experts,

Awaiting your views, Please refer union Budget 2016-17,Servicee tax on transportation of goods by vessel from India to out side India and from out side India to India is imposed,please confirm IS it applicable on ocean freight..URGENT Please.[2]


Dear TMI Experts,

Awaiting your views, Please refer union Budget 2016-17[3],Service tax on transportation of goods by vessel from India to out side India & vice versa is imposed, kindly confirm is service tax applicable on Ocean freight paid to s/line & freight forwarders through we book our container and paid them ocean freight.URGENT PLEASE.


Sir,

In para 4.1 (C) of the D. O. Letter of Joint Secretary to Govt. of India, namely D.O.F. No.334/8/2016-TRU dated 29.02.2016[4] it is clarified that the entry in the Negative List that covers services by way of transportation of goods by an aircraft or a vessel from a place outside India up to the customs station of clearance [section 66D (p)(ii)[5]] is proposed to be omitted with effect from 1.06.2016. Clause 146 of Finance Bill 2016[6] may please be seen in this regard. However such services by an aircraft will continue to be exempted by way of exemption notification [Not. No. 25/2012-ST[7], as amended by notification No. 09/2016-ST dated 1st March, 2016[8] refers]. The domestic shipping lines registered in India will pay service tax under forward charge while the services availed from foreign shipping line by a business entity located in India will get taxed under reverse charge at the hands of the business entity. The service tax so paid will be available as credit with the Indian manufacturer or service provider availing such services (subject to fulfillment of the other existing conditions). It is clarified that service tax levied on such services shall not be part of value for custom duty purposes. In addition, Cenvat credit of eligible inputs, capital goods and input services is being allowed for providing the service by way of transportation of goods by a vessel from the customs station of clearance in India to a place outside India. Consequential amendments are being made in Cenvat Credit Rules, 2004[9] [Not. No. 23/2004-CE (N.T.),[10] as amended by Sl. Nos. 2(b) and 5(h) of notification No. 13/2016-C.E. (N.T.)[11] dated refers. ]


Sri Narendra Soni ji, refer the bold line in Sri Rajagopalan Sir reply. It clarifies your question clearly. Thanks.


Thanks Mr.Ranganathan & Kalyani for updating relevant portion of Budget. It was already in our knowledge, our query is whether service tax is applicable on OCEAN FREIGHT payable to s/line or freight forwarders paid for export & Import container shipment by Vessel.

Kindly confirm whether POT/POP is applicable.


Dear Experts,

For more clarity, we re-producing relevant portion of Budget, now please confirm whether ocean freight paid to shipping line for transportation of Import & Export goods by vessel is liable for service tax.

“Service by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India is being excluded from the definition of exempted service . This would allow shipping lines to take credit on inputs and input services used in providing the said service. [Amendment in rule 2, clause (e)[12] refers]”

“Negative List that covers services by way of transportation of goods by an aircraft or a vessel from a place outside India up to the customs station of clearance is to be omitted [section 66D (p)(ii)[13]]”


Sir,

section 66D (p)(ii)[14] will be omitted with effect from 01.06.2016. Therefore till 01.06.2016 services by way of transportation of goods by an aircraft or a vessel from a place outside India up to the customs station of clearance is not liable to service tax (vide Annexure-1 enclosed with D. O. letter D.O.F. No. 334/8/2016-TRU dated 29.02.2016 of Joint Secretary to Govt. of India. Services by way of transportation of goods by an aircraft from a place outside India upto the customs station of clearance in India is exempted from service tax vide Sl. No. 53 of Notification No. 25/2012-ST dated 20.06.2012 as amended by Notification No. 09/2016-ST dated 01.03.2016 vide Sl. No. (xiii). This amendment will come into force from 01.04.2016. As per para 11.5 of the above referred D.O. Letter “recipient of services availed from foreign shipping line by a business entity located in India will get taxed under reverse charge at the hands of the business entity. (No fresh provision is being made in this regard, as it is already covered by Place of Provision of Service Rules.). As per rule 3 of Place of Provision of Service rules, 2012 “the place of provision of a service shall be the location of the recipient of service.” In view of the above ocean freight paid to shipping line for transportation of Import & Export goods by vessel is liable for service tax. But this liability arises only from 01.06.2016.


I shall try to put it in a simple way. 1. The service of transportation from shipping line received by a business entity is taxed on business entity under reverse charge. 2. And if the Indian shipping line avails the service of foreign shipping line then it will have to pay tax. In first one it was exempt earlier now made taxable. The reverse charge notification also stated that if provider of service is in non taxable territory and recipient of service is in taxable territory then recipient shall have to pay the tax. Thanks.


References

  1. ^ Post Reply (www.taxmanagementindia.com)
  2. ^ union Budget 2016-17, (www.taxmanagementindia.com)
  3. ^ union Budget 2016-17 (www.taxmanagementindia.com)
  4. ^ D.O.F. No.334/8/2016-TRU dated 29.02.2016 (www.taxmanagementindia.com)
  5. ^ section 66D (p)(ii) (www.taxmanagementindia.com)
  6. ^ Finance Bill 2016 (www.taxmanagementindia.com)
  7. ^ Not. No. 25/2012-ST (www.taxmanagementindia.com)
  8. ^ notification No. 09/2016-ST dated 1st March, 2016 (www.taxmanagementindia.com)
  9. ^ Cenvat Credit Rules, 2004 (www.taxmanagementindia.com)
  10. ^ Not. No. 23/2004-CE (N.T.), (www.taxmanagementindia.com)
  11. ^ Sl. Nos. 2(b) and 5(h) of notification No. 13/2016-C.E. (N.T.) (www.taxmanagementindia.com)
  12. ^ rule 2, clause (e) (www.taxmanagementindia.com)
  13. ^ section 66D (p)(ii) (www.taxmanagementindia.com)
  14. ^ section 66D (p)(ii) (www.taxmanagementindia.com)



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