The clearing & forwarding services under GST is a complicated issue. Here, we will analyze the problem with the help of CBEC clarification.
Clearing and Forwarding Services under GST
Definition and Scope of Service
‘Taxable Service’ means any service, which a clearing and forwarding agent provides to any person; concerning clearing and forwarding operations, in any manner.
‘Clearing and Forwarding Agent’ means any person who is engaged in providing any service, whether directly or indirectly; related to the clearing and forwarding operations in any manner to any other person and includes a consignment agent.
In the case of CCE v Kulcip Medicines (p) Ltd., the High Court has held that the service provider must undertake both the clearing as well as forwarding activities. In case the clearing and forwarding activities are separated, the services tax would not be levied under this taxable category.
Some categories of persons, who are providing indirect service in clearing and forwarding operation are exempted from paying GST.
SAC Code for Services
Code 996713 is used for the Clearing and Forwarding Services under Service Accounting Codes for GST classification. The so mentioned service comes under Cargo Handling Services, Section 6-Distributive Trade Services, Accommodation, Food & Beverage Service, Transport Services, Gas & Electricity Distribution Services. The Heading number is 9967 while; the group number is 99671 and these codes are mandatory mapping or classification of services that the taxpayer must use.
SAC (Service Accounting Code) is used to identify the service. It indicates specific code which leads to reducing the possibility of misinterpretation. SAC code in respect of the supply of service and HSN code in respect of the supply of goods; has to be uploaded while filing GST returns online. Thus, there is no need to enter the description of the goods or services while filing GST returns online.
Distributive Trade Services, Food & Beverage Service, Accommodation, Transport Services, Gas & Electricity Distribution Services.
Cargo Handling Services
Clearing & Forwarding Services
Clearing and Forwarding services attracting Service Tax:
Service Tax is payable in case of below-mentioned services.
Receiving the goods from the factories or premises of the principal or his agents or warehousing these goods.
Receiving dispatch orders from the principal
Arranging dispatch of goods according to the directions of the principal; by engaging transportation on his own or by the authorized transporters of the principal.
Managing records of the receipts and dispatch of goods and the stock available at the warehouse.
Exemption & Exclusion
Exemption to Small Scale Service Providers:
Taxable services of the total value not exceeding Rs. 10 lakhs in any FY from the whole of the service tax leviable thereon U/S 66 of the said Finance Act. Exemption:
• Taxable service provided by the person under a brand name or trade name, whether registered or not, of another person
• Such value of taxable services in regard of which such person shall pay service tax and in such manner as specified US 68(2) of the said Finance Act, read with Service Tax Rules, 1994.
Services provided to the United Nations or an International Organizations are exempt.
Any service which is taxable under clause 105 of section 65 may be exported without payment of service tax.
Services rendered to a developer of SEZ or a Unit of SEZ.
Taxable services provided by TBI (Technology Business Incubator) or STEP (Science & Technology Entrepreneurship Park).
Taxable services rendered by entrepreneurs located within the premises of TBI (Technology Business Incubator) or STEP.
Exemption to the value of goods & material sold by the service provider.
Services provided to Foreign Diplomatic Missions or Consular Post in India.
Services rendered for personal use of a family member of Diplomatic Agent or Career Consular Officials posted in Foreign Diplomatic Mission/Consular Post in India.
Valuation of Taxable Services
Where the total amount charged by the service provider, for the service rendered or to be rendered is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the summation of tax payable, is equal to the gross amount charged.
In case, where the provision of service is for consideration in money, whether the total amount the service provider charge or for such service rendered or to be rendered by him;
– Where the provision of service is for a consideration not fully or partly consisting of money be such amount of money, with the addition of service tax charged, is equivalent to the consideration.
– Where the provision of service is for a consideration which is not determinable, be the amount as may be determined in the prescribed manner.
The total amount charged for the taxable service shall include any amount; received towards the taxable service before, during or after provisions of such service.
Subject the above-mentioned provision, the value shall be determined in such as manner as may be prescribed.