Service Tax - Transportation of Milk Products exempted - not Milk from 1.3.2013 - Not Really!
TRANSPORT of milk was exempted since the beginning days of Service Tax on GTA. Notification No. 33/2004-ST, dated 03.12.2004 exempted the taxable service provided by a goods transport agency in relation to transport of fruits, vegetables, eggs or milk by road in a goods carriage. This Notification was valid till 30.06.2012.
Even the still-born Notification No. 12/2012 dated 17.03.2012 exempted fruits, vegetables, eggs, milk, food grains or pulses transported in a goods carriage.
This notification was superseded by Notification No, 25/2012-ST dated 20.06.2012 (with effect from 01.07.2012) which also exempted transportation of milk in Sl. No. 21(a) which reads as:
fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage
This was amended by Notification No. 3/2013 - ST dated 01.03.2013, by which the exemption was given to
(d) foodstuff including flours, tea, coffee, jaggery, sugar, milk products , salt and edible oil, excluding alcoholic beverages;
So, now there is an exemption for transport of milk products, but not milk. But why was 'milk' removed from the notification and 'milk products' introduced. This happened because of an alignment of the notification entries for exemption to goods transported by rail or vessel and by road. The rail notification entry was simply transported into the road notification.
But then, was transport of milk by rail not exempted as Sl. No 20 of Notification No. 25/2012 dealing with exemption to transport of goods by rail had no 'milk' but contained 'milk products'.
Fortunately Board had clarified this issue in Circular No.167/2 /2013 - ST, dated 01.01.2013. The Indian Railways sought a clarification from the Board as to whether service by way of transportation of milk by rail is covered by Notification No.25/2012-ST dated 20.06.2012, serial number 20. The Board clarified:-
The expression 'foodstuff' appearing in Notification No.25/2012-ST dated 20.06.2012, serial number 20(i) includes milk. Therefore, it is clarified that the service by way of transportation of milk by rail or a vessel from one place in India to another, is covered by the Notification No.25/2012-ST dated 20.06.2012.
Thus, according to the Board, foodstuff includes milk and so transport of milk is exempted.
The notification was amended two months after the clarification was issued and the Board could have used this as an opportunity to include this clarification in the notification itself and which would have taken care of the service of 'transport of milk by a goods transport agency, by way of transport in a goods carriage or by transportation by rail or a vessel'.
Why DDT had to raise this issue is because we have come to know that some Service Tax officers are planning to issue notices to transporters of milk by GTA. If a notice is issued, it will be confirmed and at some appellate stage, it will be held that Board Circulars are not binding on adjudicating authorities and the clarification was in relation to transport by rail and not transport by road ….And the litigation may go on.