Service tax on transportation by supplier of Goods, Service Tax

[Shyam Naik]

Dear All,

We are purchasing Charcoal from one supplier.

The supplier has quoted price of ₹ 400 per ton + applicable Sales Tax. The supplier shall also undertake the transportation of the goods to our plant and charge ₹ 700 per ton.

Whether we are liable to pay service tax on RCM basi

Posts / Replies

[Ganeshan Kalyani]

From your query it seems that supplier is taking care of freight expenses. He would arrange for freight and pay freight to the transporter. Hence the liability to pay service tax befalls on him. Thanks.

[KASTURI SETHI]

I concur with views of Sh.Ganeshan Kalyani, Sir. Freight being borne by the supplier, hence liability for payment of ST on him ( on the supplier).

[CS SANJAY MALHOTRA]

Dear Mr. Sham,

Agree with both experts. Person (Consignor / Consignee) making the freight payment is liable to pay Service Tax under RCM, but this does not include Courier Companies (Blue Dart / DHL........) even if they transport material as they are registered as Cargo Management Services.

[KASTURI SETHI]

SH.CS SANJAY MALHOTRA JI,

Thanks for enrichment of knowledge, Sir.