Service Tax - Rail freight - Didi Exemption Continues
THE Service Tax on transport of goods has always been a jinxed tax. The tax was imposed on transport of goods by Rail in 2009 budget. The Railways really never took the tax seriously. DDT spoke to several Rail Officials and they considered the tax to be a joke. In 2009, 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.
From 2009 till June 2012, the tax was being exempted on a quarterly basis and the tax would have come into force from 1st July 2012.
Now, the Government has exempted it up to 30 September 2012:
1. Service of transportation of passengers, with or without accompanied belongings, by railways in --
(A) first class; or
(B) an air conditioned coach
2. Services by way of transportation of goods by railways.
Apparently, Didi's presence stills looms large in the Rail Bhavan and the Government cannot take any serious risk now, just before the Presidential elections. But why these quarterly extensions - why can't they simply say that these services are exempted until further orders?
Notification No. , Dated: July 02, 2012