Service Tax on ocean freight - Recent changes

(1) Indian Shipping Agent may not know the value of freight charged by foreign Shipping Line / Freight Forwarder to the Foreign Supplier. Even though, he supposes to pay correct service tax on such value!

(2) The Indian Shipping Agent is the person liable to pay service tax and so, he has to pay service tax by GAR-7 Challan in his own name. As GAR-7 Challan is in the name of Shipping Agent, Importer cannot avail Cenvat credit of service tax paid in the name of Shipping Agent.

(3) Shipping Agent may pay service tax by a single Challan covering different cargo imported by different importers. There is no provision to pass on proportionate Cenvat credit attributable to INPUT SERVICE unlike the provisions to pass on proportionate Cenvat credit for INPUT GOODS by registered dealers / importers.

(4) Freight payable upto Indian Customs station is already includible in the value of GOODS and thereby subject to Customs Duty. On the same freight amount, Service Tax is also payable. Thus, there is DOUBLE TAXATION on the same value of ocean freight. Interested readers may refer:

http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26469

http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26467

These are personal views.

Shvetal Parikh 30/01/2017