Freight Forwarding Agent, Goods and Services Tax - GST

[harjinder singh]

Please guide me on the provision of Taxability of GST on Freight Forwarding agents who provides services to clients of export of goods

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[KASTURI SETHI]

Pl. elaborate your query. What is your specific problem ?

[KASTURI SETHI]

Dear Querist,

Freight Forwarding Agent is an intermediary. GST is applicable @18% . It is classified under the category, "Other support services n.e.c." under HSN 598999.

[KASTURI SETHI]

In continuation of my reply above, go through various dictionary meanings of the related terms along with my interpretation and analysis.

3 What is freight ?

Ans. As per the Law Lexican The Encyclopedic Law Dictionary with Legal Maxims by P. Ramanatha Aiyar.

1. Goods transported in bulk by truck, train, ship, or aircraft:
2. Carrying of goods in bulk
3. Transportation
4. Money paid for carriage of goods by sea; the price paid for use of ship to transport the goods
5. The word, ‘freight’ means the reward payable to a shipowner for safe carriage and delivery of the goods carried in ship;

Thus the word, ‘freight’ also includes the goods to be transported in bulk by ship, air, road and rail. It also includes the elements of ‘safe carriage and delivery of the goods carried’ in addition to the charges for transportation of the goods. In other words, the freight also signifies responsibility for the safe delivery to the buyer’s destination on the part of freight forwarder’.

4.4. What is the meaning of ‘forwarder’ ?

Ans. As per the Law Lexican The Encyclopaedic Law Dictionary with Legal Maxims, the word, ‘forward’ means to send toward or to the place of destination, to transmit, to transport or to carry. Hence the word, ‘forwarder’ means a person who receives and forwards the goods, taking on himself the expense of transportation, for which he receives compensation from the owners, but who has no concern in the vessels or wagons by which they are transported, and no interest in the freight; a person who for a compensation takes charge of the goods entrusted or directed to him and forwards them, that is, puts them on their way to their place of destination by the ordinary and usual means of conveyance or according to the instructions he receives.

When the goods have been shipped, it is called ‘freight forward’. A note of ‘freight release’ shows that all freight charges have been paid. It must be produced to the master of ship before they can be taken away.

4.5 What is the meaning of Freight Forwarder and Freight Forwarding Agent ?

The meaning of the terms, ‘Freight Forwarder’ and ‘Forwarding Agent’ in different dictionaries and Halsbury’s law of England have been discussed by Hon’ble Tribunal in the case of Mahavir Generics Vs. CCE, Bangalore - 2004 (4) TMI 2 - CESTAT, NEW DELHI. The meanings under different dictionaries are as follows :-

As per Black’s Law Dictionary –

“A person or company whose business is to receive and ship goods for others - Also termed freight-forwarder-A freight forwarder who assembles less than-carload shipments (small shipments) into carload shipments, thus taking advantage of power freight rates.”

As per Penguin Business Dictionary –

“Forwarding Agent - A GENERAL AGENT who specializes in moving goods from a factory or port of entry to their proper destination. Such an agent normally owns the transport necessary for this work and often arranges FREIGHT and customs formalities for the principal.”

Words and Phrases Permanent Edition –

“Freight forwarding company receiving goods from shippers, retaining them in warehouse, and then subletting carriage thereof to other carriers, held ‘common carrier’ within statute requiring certificate, and not mere ‘forwarding agent’. A mere forwarding agent, who does not receive goods into his custody, but, as agent for shipper, merely contracts for their transportation by carriers, and who has no interest in the freight, but receives compensation from the shipper as his agent, is not a ‘common carrier’, but an alleged forwarding agent who receives goods for transit, issues bills of lading, makes contracts in his own name for carriage, is as to a person with whom he contracts for the delivery of goods, a ‘common carrier”.

As per the Concise Commercial Dictionary –

“Forwarding agent– An agent who attends to the collection, forwarding and delivery of goods.”

In Halsbury’s Laws of England Fourth Edition Volume 5 “Forwarding Agent” is dealt with as follows –

“A forwarding agent is one who carries on the business of arranging for the carriage of goods for other people. It must be clearly understood that a forwarding agent is not, in general, a carrier; he does not obtain possession of the goods; and he does not undertake the delivery of them at the other end. All that he does is to act as agent for the owner of the goods to make arrangements with the people who do carry, such as shipowners, road hauliers, railway authorities and air carriers, and to make arrangements, so far as they are necessary, for the intermediate steps between the ship and the rail, the customs or anything else.”

Disclaimer : The above information is for education purpose and enrichment of knowledge on the issue and not meant for legal and court proceedings.