Service Tax - Transport of Goods by Rail – Exempted - Indian Rail vs Indian Revenue
SERVICE Tax on transport of goods has always been a jinxed tax. The tax imposed on transport of goods by Rail introduced in this year's budget is no different. The Railways really never took the tax seriously. We spoke to several Rail Officials and they considered the tax to be a joke.
In DDT 1180 - 21.08.2009, we reported,
DDT asked a senior Railway officer whether they were ready to collect Service Tax on goods transport. He told us that the Finance Ministry has no right to levy Service Tax on Rail freight and he had no instructions to collect the tax. He said his Board does not recognise this tax. We tried to explain to him that this was an Act passed by Parliament, but he was not impressed. He was sure that it requires approval by his Board and as of now his Board was not too keen to approve the Finance Act. He was aghast that somebody is trying to tax the Railways! When told that Railways are already paying Service Tax on catering, he said it was paid by IRCTC and not by Indian Railways. We really don't know whether Mamata Didi has the same views.
We had reported in yesterday's DDT
The mighty Indian Railways are in for a battle with the Indian Revenue. We spoke to several Railway officers who were either ignorant or arrogant about the new levy. Many officers told us that the Excise Department cannot levy any tax on Rail freight and the Rail Ministry is not going to agree to any such proposal.
We tried to argue with them that it is not a proposal, but THE LAW – many of them were not convinced.
Anyway, finally the Rail Babus had the last laugh – they did not make any arrangements to collect this tax – they knew all through that it will never be implemented. We mistook their confidence for arrogance. We regret that we mistakenly thought that a law passed by Parliament is supreme – we never really understood that a Department/ministry of the Government of India will show such scant respect for the Parliament and get away with it. It is not easy to get mighty organisations to be tax compliant.
The Indian Railways have won over the Indian Revenue and Parliament. There will be no service tax on transport of goods by Rail – at least as of now.
The elusive notification which we could not get yesterday is now available. The Train has arrived. We had reported about the late arrival of the train, early in the morning.
Consequently the abatement Notification No. 1/2006 is again amended to restore it to the pre September 2009 position. That means the position with regard to levy of service tax on transportation of goods by rail is rolled back to the pre-September 2009 in which case only the service rendered by any person other than Government Railways in relation to transport of goods in containers by rail would be subjected to tax.
Notification No. and Notification No. : Dated 1st September, 2009.