Business Daily from THE HINDU group of publications
Monday, Oct 09, 2006
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Business Daily from THE HINDU group of publications Monday, Oct 09, 2006 ePaper |
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Mentor
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Taxation Logistics - Taxation Columns - At Your Service Clearing charges
Are destinations charges, terminal handling charges (THCs), delivery order fees, destination haulages, etc. subject to service tax when the same are prepaid here in India? Malay Srivastava Ports, Custom house agents and cargo-handling agents do provide services in relation to exports and imports of goods in Indian jurisdiction. Service tax is applicable only in respect of taxable services and when the service liability occurs, the liability to pay service tax is on the person liable to pay service tax under Section 68 of Finance Act, 1994. Prima facie, it appears that destination charges, THC, delivery order fees, destination haulage, etc., are being paid in respect of taxable services rendered by the service provider from abroad. If these services are rendered in India, there is no doubt on the taxability of such services. In view of new Section 66A inserted by Finance Act, 2006 and Section 68(2), service received in India which are rendered from outside India are taxable services and persons so receiving the services and paying for it are deemed to be the persons liable to pay service tax in respect of such services. Under Section 68(2), the Central Government has notified that in cases falling under Section 66A, the service receiver in India will be the person liable for paying the service tax in relation to all such taxable services. Rule 4 of Taxation of Services (provided from outside India and received in India) Rules, 2006 also provide for the same. Thus, all the charges as mentioned in the query shall be liable service tax even when such charges are paid or pre-paid (services to be provided are also taxable) in India. However, if one can satisfy that these are in relation to exports, then service tax may not be payable under cargo handling.
Send in your queries to MentorAtYourService@gmail.com
Sanjiv Agarwal
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