Inclusion of handling charges to Goods transport Agent in case of M/s Food Corporation of India – DGST's clarification
AN instance of avoidance of payment of appropriate Service Tax amount has been reported by the Central Excise Commissionerate, Rohtak to DGST. Brief details in this regard are as follows:
In respect of the transportation services provided by the contractors with regard to the transportation of the food grains stocks, M/s. Food Corporation of India (M/s. FCI) is paying Service Tax on 25% value of the said transportation charges (upon availing abatement of 75%) after availing the benefit of Notification No. 34/2004-ST dated 03.12.2004. However, M/s. FCI is paying Service Tax only on transportation charges and neither they nor other agencies make payment of Service Tax on Handling charges consisting of labour/loading and unloading charges even if the services of transportation as well as handling are provided by the same contractor. In view of the clarification given by the Board/Ministry vide Circular No. 104/07/2008/ST dated 06.08.2008. F. No. 334/4/2006-TRU dated 28.02.2006 (para 3.2 and 3.3) and F.No. 334.1/2006-TRU dated 29.02.2008 (para 3.2 and 3.3). M/s. FCI should have added the loading charges in the transport charges, wherever provided by the same contractor/agency, for determining the taxable value and accordingly discharged Service tax liability. As such, if loading/unloading charges are added into the transport charges, many bills may cross the exemption limit of Rs.750/-, on which no Service Tax has been paid by M/s. FCI.
To summarize the above, M/s. FCI should have included handling charges to the transport charges, wherever provided by the same contractor/agency. They have evaded Service Tax by not including the value of handling charges to the transport charges and wrongly availed the slab exemption of Rs.750/- per consignment under Notification No. 34/2004-ST dated 03.12.2004.
In this connection, DGST draws attention to its clarification issued vide letter F.No.V/DGST/88/GTA/01/08 dated 04.11.2008 pertaining to the availment of exemption under Notification No.34/2004-ST dated 03.12.2004, which may also be appropriately taken into consideration (see below for details of DGST's letter dated 04.11.2008).