Indian Service Tax
Custom House Agent
Effective Date: 15/06/1997
Authority: Notification No. 17/97-ST, dt. 06/06/1997 (See at the end of this Chapter).
Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.
Definition
"Custom House Agent" means a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of Section 146 of the Customs Act, 1962 (52 of 1962), [Section 65(35)]
Taxable service: Customs clearing service provided by Customs House Agent to a client in relation to the entry or departure of conveyances or the import or export of goods.
Value of taxable service: Gross amount charged by clearing Agent from the client for the service rendered in relation to entry or departure of import or export of goods.
Exemptions
Person liable to pay: Custom House Agent
Head of Account
| Minor-head | 004400107 | Customs House Agent Services | S1.Code | SCCD | | Sub-head | 00440010701 | Tax Collection | 00440026 | 114 | | Sub-head | 00440010702 | Other Receipts | 00440027 | 117 | | Sub-head | 00440010703 | Deduct Refunds | 00440028 | 112 |
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Questions & Answers
Q. 1 Who is a Custom House Agent?
Ans. "Custom House Agent" is a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act, 1962. A person is permitted to operate as a customs house agent, temporarily under regulation 8(1) and permanently under regulation 10, of the Customs Rouse Agents Licensing Regulations, 1984.
Q. 2 What is the Taxable Service in the case of a Custom House Agent?
Ans. The taxable services rendered by a Custom House Agent (CHA) means any service provided to a client by a CHA in relation to the entry or departure of conveyances or the import or export of goods.
The services rendered by CHA are not merely limited to the clearing of the import and export consignment. The CHA also renders the service of loading/unloading of import or export goods from/at the premises of the exporter/importer, the packing, weighment, measurement of the export goods, the transportation of the export goods to the customs station or the import goods from the formalities such as payment of expenses on account of octroi, destuffing /pelletisation terminal handling, fumigation, drawback/DEEC processing, survey /amendment fees, dock fees, repairing and examination charges, landing and container charges, statutory labourcharges, testing fees, drug control formalities, sorting /marking/stamping/sealing on expenses such as crane/fork lift charges, taxi charges, Photostat and fax charges, bank collection charges, courier service charges, and miscellaneous other expenses on account of the importer /exporter. For all the above charges, the CHA is ordinarily reimbursed by the importer/exporter for whom the above services are rendered. Apart from the above charges, the CHA also charges the client for his services under the head /nomenclature of "agency and attendance charges" or similar kind of
heads which is purported to be his service charge in respect of the services rendered in relation to the import/export goods.
Q. 3 What is the value of Taxable Service in case of custom house agent?
Ans. The value of the taxable service provided by a CHA to a client is the gross amount charged by such agent from the client for services rendered in any manner in relation to import or export of goods. The Service Tax is to be computed only on the gross service charges, by whatever head/nomenclature, billed by the CHA to the client. Sometimes, the charges for service are shown as "agency commission", "charges", "agency and attendance charges", "agency charges" or other similar descriptions. The Service Tax will be computed only with reference to such charges. The payments made by CHA on behalf of the client, such as statutory levies (Cess, Customs Duties, Port dues etc.) and various other reimbursable expenses incurred are not to be included in the value of taxable service
for computing the Service Tax.
Q. 4 What is the value of taxable service provided by a CHA in case of turnkey Import/Export ?
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Ans. In many cases the CHA provides services for imports and exports on turnkey basis where a lump sum amount is charged from the client for undertaking various services. The said lump sum amount covers not only the "agency commission" fee but also other expenses and no separate break-up is given in respect of these expenses. In such cases, the value of the taxable Service Tax shall be 15% of the lump sum amount charged to the client. Service Tax of 5% will be chargeable on the above 15%.
Q. 5 Is Service Tax chargeable separately from Sub-Contractor CHA, where main CHA sub contracts work to another CHA located in other station?
Ans. Whenever CHAs sub-contract their work to CHAs located in other stations, it is possible that the sub contracting CHA raises the bill on the main CHA who in turn raises the bill to the client. In such cases the subcontracting CHA will not be required to pay Service Tax on the bills raised by him on the main CHA. The Service Tax will be payable by the CHA who provides the actual service to the client and raises the bill on the client.
Q. 6 Would Centralised registration/payment of tax be permitted in the case of CHAs having office in different places but bills are raised in the central office?
Ans. Yes. Even if the C.H.A. has many branches at different stations, but the billing is done only from the main or central office, only such office needs to be registered for Service Tax purposes.
Q. 7 Is the Service Tax leviable on the charges received by CHA from the Shipping Lines for canvassing of Import / Export cargo?
Ans. No. The payment received by the CHA from the Shipping Lines for canvassing of Import / export Cargo, would not be chargeable to Service Tax as these activities do not fall within the ambit of taxable services provided by a CHA.
Q. 8 s the service provided by a CHA to any Government Department exempted from payment of Service Tax?
Ans. No. The service provided by a CHA to the Government Department has not been exempted from payment of Service Tax.
Q. 9 Are the services provided by CHAs to Diplomatic Missions exempt from payment of service tax?
Ans. Not always, only the services rendered by CHAs to UN or certain International organisations and a few notified diplomatic missions are exempt from payment of Service Tax.
Main text of Departmental Circular/TN
[TN No. 5/97-ST, dated 12.06.1997 of Mumbai Commissionerate]
Sub:- Imposition of Service Tax on services rendered by Custom House Agents and Steamer Agents - Regarding.
2.1 The expression "Custom House Agent" has been. defined to mean a person licensed,. temporarily or otherwise, under the regulations made under sub-section (2) of Section 146 of the Custom Act, 1962. A person is permitted to operate as a Custom House Agent, temporarily under regulation 8(1) and permanently Regulations, 1984.
2.2 As per the Finance Act, 1997, the taxable service rendered by a Custom House Agent means any service provided to a client by a Custom House Agent in relation to the entry or departure of conveyances or the import or export of goods. The value of the taxable service in relation to the service provided by a Custom House Agent to a client has agent from the client for services rendered in any manner in relation to import or export of goods. The service tax is chargeable @ 5% on the value of the taxable service.
2.3 The services rendered by the Custom House Agent are not merely limited to the clearing of the import and export consignment. The CHA also renders the service of loading/unloading of import or export goods from/at the premises of the exporter/importer, the packing, weighment, measurement of the export goods, the transportation of the export goods to the customs station or the import goods from the customs station to the importer's premises, carrying out of various statutory and other formalities such as payment of expenses on account of octroi, destuffing/pelletisation, terminal handling, fumigation, drawback/ DEEC processing,survey/amendment fees, dock fees, repairing and examination charges, landing and container charges, statutory labour charges, testing fees, drug control formalities, sorting/marking/stamping/sealing on behalf of the exporter/importer. The Custom House Agent also incurs various other expenses such as crane/fork lift charges, taxi charges, photostat and fax charges, bank collection charges, courier service charges, and miscellaneous other expenses on account of the exporter/importer. For all the above charges, the CHA is ordinarily reimbursed by the importer/exporter for whom the above services are rendered. Apart from the above charges, the CHA also charges the client for his service under the head/nomenclature of 'agency and attendance charges' or similar kind of heads which is purported to be his service charge in respect of the services rendered in relation to the import/export goods.
2.4 It is clarified that in relation to Custom House Agent, the service tax is to be computed only on the gross service charges, by whatever head/ nomenclature, billed by the Custom House Agent to the client. It is informed that the practice obtaining is to show the charges for services as "agency commission", "charges", "agency and attendance charges", "agency charges" and some similar descriptions. The service tax will be computed only with reference to such charges. In other words, payments made by CHA on behalf of the client, such as statutory levies (cess, Customs duties, port dues, etc.) and various other reimbursable expenses incurred are not to be included for computing the service tax.
2.5 In many cases, the Customs House Agent undertakes "turnkey" imports and exports where a lump sum amount is charged from the client for undertaking various services. In these cases, the lump sum amount covers not only the "agency commission" fee but also other expenses and no separate break-up is given in respect of these expenses. It has been decided that in such cases, the value of the taxable service shall be 15% of the lumpsum amount charged to the client. The Custom House Agents are required to show the service charges as 15% of such lumpsum amount of the bills and Service Tax of 5% will be chargeable on the above 15%.
2.6 Some times, CHAs sub-contract their work to CHAs located in other stations. In such cases, it is possible that the sub-contracting CHA raises the bill on the main CHA who in turn raises the bill to the client. It has been decided that in such cases, the sub-contracting CHA will not be required to pay service tax on the bills raised by him on the main CHA, The service tax will be payable by the CHA who provides the actual service to the client and raises the bill to the client.
2.7 A CHA may have various branch offices located at different stations but all these branch offices do not raise the bills and only the main or central office will be raising the bills. In such cases, only the central office should be registered with the Department.
2.8 Sometimes, the bills raised by the CHA are not entirely paid by the client and the CHA is forced to give discounts. In such cases where the final bill raised is lower than the initial bill, it may be mentioned that the law provides for claiming of refund of excess service tax paid within six months from the date of payment of tax. If the CHA can produce evidence of having charged less services fee, he may claim refund of excess service tax paid, if any, as per the provisions of law.
Notification
Effective Date
[Notification No. 17/97-Service Tax, dated6/6/1997]
In exercise of the powers conferred by Section 88 of the Finance Act, 1997 (26 of 1997), the Central Government hereby appoints the 15th day of June, 1997, as the date on which the provisions of the said section of the said Act shall come into force except the service tax on taxable services specified in sub-clauses (g), (j), (k), (1), (m), (n), (o), (p), (q) and (r) of clause (41) of Section 65 of the Finance Act, 1994 (32 of 1994).
