Is Rail freight taxable under Service TAx ?

[Mr Rao]

Dear sir,

One client is showing some amount as RR freight (Rail freight ) under expenditure in his P&L account. Whether this amount is taxable under the provisions of Service Tax Provisions. If it is taxable from which period the same is taxable. Please reply.

[Ganeshan Kalyani]

If rail freight is appearing in the debit side I.e. expenditure side of Profit & Loss account then it means that the assessee has avail the said service and the service tax applicability lies on service provider.

[Ganeshan Kalyani]

Transport of goods in Container by Rail is taxable w.e.f. 01.05.2006 & Transport of goods by Rail is taxable w.e.f. 01.09.2009.

[Ganeshan Kalyani]

Service tax liability on Rail Freight is under forward charge i.e. service provider is liable to pay service tax.

AI Summary

Rail freight service tax applicability: transport by rail and container movements are taxable, with service provider liable under forward charge.
Rail freight recorded as expenditure signifies availing a service, but Service Tax liability is on the service provider under a forward charge. Transport of goods in containers by rail became taxable from 01.05.2006 and transport of goods by rail became taxable from 01.09.2009.