Liability of service tax

[ASHISH DESAI]

Fin. Minister has extended levy of SERVICE TAX ON RAIL FREIGHT w.e.f. 01-09-2009. my query is 1. is it a part of GTA, ANY ABATEMENT...? 2. Who has to pay the Ser.Tax? will railway charge it in the invoice & claim cenvat credit? 3. are we the service receipient be liable to pay? if yes,can we claim cenvat credit? somewhere I had read about the cenvat to be claimed by Railways. pl. clarify.

[Rama Krishana]

There is substitution of sub-clause (zzzp) of clause (105) of section 65. There was abatement of 70% for the Transport of goods in containers by rail under notification no. 1/2006. Since the new levy would be effective from 1-9=2009, government may amend the scope of exemption by that time positively in line with the amendment.

AI Summary

Service tax on rail freight alters abatement and cenvat credit treatment, affecting payor liability and invoicing practices. Extension of service tax to rail freight is effected by substitution of sub-clause (zzzp) of clause (105) of section 65, bringing rail freight within the charge of taxable services. Prior to the amendment there existed a 70% abatement for transport of goods in containers by rail under the notification in force; the government may amend the scope of exemption or abatement to align with the new levy, affecting which party charges the tax and claims cenvat credit.