CA Daulal Daga
Prior to 01/07/2012, transportation of goods service was taxable under the categories of transportation of coastal goods, goods transported through nation waterways and inland waterways, transportation of goods by air, transportation of goods by Rail and transportation of goods through pipelined or other conduit service. In this case Transportation of goods by Rail Service defined in 65 (105) (zzzp) in this mode of transport is prescribed by Rail only.
Abatement in value for transport of goods by Rail:-
The item no. 2 in notification no 26/2012-ST dated 20/06/2012 permits abatement from gross amount charges for determining the value of taxable service for services of transport of goods by rail. The transportation of goods by railway whether government or private will be covered under serial no 2 of this notification. The abatement of 70% of the gross value charged is permitted as per this entry. The service tax is charged on balance 30% of the gross amount.
The service provider is entitled to the credit of excise duty paid on inputs and capital goods and service tax paid on input services. Thus the provider of service can take CENVAT credit of excise duty as well as service tax also.
Currently, Service tax is payable on 30% of the value of rail transport for goods and passengers, 25% of the value of goods transport by road by a goods transport agency and 40% for goods transport by vessels. There is no restriction on availment of Cenvat Credit in case of transportation by Rail But no Cenvat Credit available to the hand of goods transports by GTA and goods transport by Vessel.
In Union Budget 2014-15, now a uniform abatement is prescribed for transport by rail, road and vessel and 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.
Suggestion:- In my view the uniform condition of Non availment of Cenvat Credit should be re viewed and must be provide Cenvat Credit to Transport by Rail as earlier provisions in item no. 2 of Notification No 26/2012-ST dated 20/06/2012.