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Unit 7: Collection and Recovery of Service Tax and Assessment Procedure

Notes
Further, the Board's Circular No. 97/6/2007 (sic) 97/8/2007-ST, dated 23-8-2007
contemplates compliance of certain conditions where the sale has taken place at the
destination point. These conditions are as follows:-
(i) the ownership of goods and the property in the goods remained with the seller of
the goods till the delivery of the goods in acceptable condition to the purchaser at
his door step;
(ii) the seller bore the risk of loss of or damage to the goods during transit to the
destination; and
(iii) the freight charges were an integral part of the price of goods.
The circular provides that if aforesaid conditions are satisfied, the credit of the service tax
paid on the transportation up to such place of sale would be admissible.
The first requirement was fulfilled because:
(i) the supply of cement by appellant to its customer was 'FOR destination',

(ii) the freight up to the door step of the customer was borne by the appellant, and
(iii) the service tax on the freight charges was paid by the appellant.
Moreover, for transportation purposes insurance cover has also been taken by the appellant
which further shows that the ownership of the goods and the property in the goods has not
been transferred to the seller till the delivery of the goods in acceptable condition to the
purchaser at his door step. Accordingly, the second condition also stood fulfilled.
Since, the delivery of the goods is "FOR destination' price, the third condition that the
freight charges were integral part of the excisable goods also stood fulfilled.
In view of above discussion, the High Court opined that the questions of law deserved to
be answered in favour of the assessee-appellant and against the Revenue. Hence, it held
that the assessee was entitled to the credit of the service tax paid on the freight up to the
door steps of the customer.

Source: http://220.227.161.86/20925frpubcd_bos1.pdf

7.7 Summary

 The Centre had, in Budget 2011-12, announced a shift in the basis of collection of service
tax from receipt basis to an accrual basis with effect from April 1.
 The Finance Ministry’s decision to review this move comes in the wake of representations
from many industry associations, who have suggested that status quo be maintained and
service tax collections be continued on receipt basis.
 The Finance Act of 1997 further extended the scope of service tax to cover a larger number
of services rendered by the following service providers, from the dates indicated against
each of them.

 The unique feature of Service Tax is reliance on collection of tax, primarily through
voluntary compliance.
 Government has from the very beginning adopted a flexible approach concerning Service
Tax administration so that the assessees and the general public gain faith and trust in the
tax measure so that voluntary tax compliance, one of the avowed objectives of the Citizens
Charter, is achieved. Substantive and procedural liberalization measures, adopted over

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