Service tax on railway freight collected by liners
joseph david
(Querist) 18 January 2013
This query is : Resolved
In brief, the issue involved is that all the liners, who dealt with us, were paying service tax under` Business support services’ for their activity carried at respective ports & ICDs. When the goods imported at respective ports the liner will transport the goods to ICD, or as the case may be, to respective destinations. Similarly when the goods are exported from ICD to port the same will be sent to the respective ports by rail. But the liners will charge service tax in their bills which includes freight by rail viz., on carriage imports and service tax is being paid under `Business support services’ @ 12.36 %.
But the railway freight is classified under separate category of services under `Transport of goods by Rail’ vide Notification NO. 1/2006 ST dated 01.03.2006 as amended under Notification No. 26/2012 Dt 20.06.2012. But no service tax is payable under `Railway Freight ‘by the service provider till 30th Sep 2012 vide Notification No.9/2012 St dated 17.03.2012.
Subsequently I have contacted all the top personnel sitting at Mumbai, Cochin, & Delhi. But no body has properly responded on this matter except Mr. Kennedy, CEO of AP liner in presence of VPF on 28th Nov 2012. I have contemplated that their classification itself is wrong under `Business support services’ for the activity carried from ICD to port and Port to ICD when specific category of service viz., Transport of goods by rail’ already announced by the CBEC vide Notification No.1/2006 Dt 01.03.2006.Under this category of service the service tax liability is only 30 %on gross bill amount which includes other charges. This abatement is not available if the service provider has availed cenvat credit in respect of inputs or capital goods or inputs services for providing the said services.
Finally he has accepted my views and requested us to take opinion from senior consultant in taxation. We have informed him that we would take opinion from Retired Board Member from CEGAT. CEO said that they would change their on line system accordingly on this matter after getting the opinion from senior consultant.
But, in fact we came to know that ICD, Hyderabad, is paying service tax by availing abatement under Notification No.1/2006 S.T dated 01.03.2006. This is not correct, ICD supposed to pay service tax from 01.10.2012 only not prior to that since the said services are completed exempted till Sep 2012 under Notification No. 9/2012 Dated 17.03.2012.
In this scenario, the liners cannot apply for refund for the service tax paid erroneously @ 12.36 % on rail way freight since the service tax was paid under the category of `Business support services.’
Raj Kumar Makkad
(Expert) 18 January 2013
Better to consult a senior CA for this matter.
