In case of services of import of goods provided by freight forwarder, service tax is payable on entire charges, as place of provision of service is ‘taxable territory’ (India). The charges include ocean freight also.
Ocean freight from a place outside India up to the first customs station of landing in India is not subject to service tax as it is in negative list of services as per section 66D (p) of Finance Act, 1994.Hence, it may be advisable to split the contract into three – one outside India (as intermediary), second ocean freight (actual basis) and third services within India.
Exemption to transportation of food stuff by vessels will be limited to food grains including rice and pulses, flour, milk and salt. For transport by vessel , Service Tax shall be payable on 30% of the value of such service subject to a uniform condition of non-availment of Cenvat Credit on inputs, capital goods and input services with effect from 1st April 2015 for transportation of goods by vessel within India including Ocean Freight.
