Scheme for service tax defaulters
Tribune News Service

Ludhiana, July 5
For the quick resolution of disputes involving small amounts of service tax up to Rs 25,000, the central excise department has asked the parties concerned to make their declaration before September 30.

The commissioner, central excise and service tax, A.K. Mehra, yesterday said that the dispute resolution scheme of the Centre was in operation from July 1 to September 30.

As per the scheme, amnesty would be available on the payment of 50 per cent of service tax amount involved in the show-cause notice and the penalty and interest would be waived.

The scheme covered all cases where tax arrears, including interest and penalty, were payable under the Finance Act, but were not paid prior to March 1, 2008, and where show-cause notices were sent.

However, service providers who had collected service tax from their service receivers, but did not pay tax to the government shall not be covered under the scheme.(source The Tribune 6-7-08)

 

 

 

Service tax roadblock ahead

K.R. Srivats
Mamuni Das

Service tax interpretation continues to be a contentious issue between the road transporters and the Government. Alleging that the Government is adopting a callous attitude towards their demands on service tax and toll rates, the All India Motor Transport Congress (AIMTC) has reiterated its threat of launching a countrywide, indefinite strike from July 2.

Although the Finance Ministry had recently exempted supply of transport vehicles to goods transport agencies (GTA) from service tax, the AIMTC says several service tax are yet to be resolved.

The bone of contention between the two sides is a set of show cause notices issued by the Service Tax Department to some of the GTAs on alleged service tax evasion on account of claiming of abatement benefits on cargo handling, and storage/demurrage charges.

Currently, cargo handling and storage/warehousing services separately attract service tax. Apart from these two, GTA services for transportation of goods by road was also under the service tax net, but had the benefit of 75 per cent abatement on the total amount.

GTA services

The interpretation of which activities constitute GTA services is causing friction between the two sides as abatement facility is available for all GTA services.

Now, the Revenue Department says that service tax will be applicable only on 25 per cent of the total value charged by GTAs towards freight services. However, the AIMTC contends that GTA services should logically cover all services (such as labour/cargo handling, storage/warehousing) offered for road transport.

“Since GTAs collect the service tax from the consignor/consignee, it is not practical (on the Government’s part) to now claim taxes for past transactions from GTAs,” said AIMTC Chairman, Mr Charan Singh Lohara, adding that Government should have raised this issue much earlier.

The Revenue Department contends that the 75 per cent abatement was being enjoyed by GTAs on the total value mentioned on the consignment note — which included cargo handling, storage and warehousing charges also. However, Mr Lahara says: “Since it is trade practice for GTAs to offer labour/cargo handling and demurrage/storage facilities to consignors, the abatement facility should be on a transporters’ entire range of services.”

Only on freight

The Revenue Department’s contention is that service tax collections would get hit if GTAs were to claim abatement on the total amount in the consignment note (bilti). “The intent is to provide abatement only on freight charges and not on storage, cargo handling and warehousing services,” said Government sources.

In an attempt to resolve the issue, the CBEC top brass had convened a meeting last Thursday. However, the matter remained unresolved even as the Finance Ministry is confident that the “procedural glitches” can be sorted out.

Payment of service tax by transporters has been a controversial issue for many years, and transporters went on strike in 1997 and 2004 on the issue. The Indian transport industry with more than 48 lakh registered commercial vehicles, gives direct employment to about 2 crore people.

Additionally, AIMTC is looking for relief on highway toll charges and duties on diesel, among others. (Business Line 30-6-08)

 

 

News relating to Service Tax

 

Pre-closure or foreclosure charges collected by banks and other companies, as part of their lending and financial services activities, would attract service tax. This clarification has been given by the Finance Ministry on June 27, 2008. Pre-closure or foreclosure charges are not in the nature of "interest" as held by the CBEC.

 

 

Service tax relief for truck owners

 

New Delhi, June 26

Supply of transport vehicles to goods transport agency (GTA) for transport of goods by road will not attract service tax, the Finance Ministry said here today.

Budget 2008-09 had said that services provided in relation to “supply of tangible goods for use, without transfer of possession and effective control” would attract service tax from May 16.

The field formations in the revenue department had taken a stance that “goods carriage” (transport vehicles) would be covered under this provision and hence service tax would be applicable on supply of goods carriage to GTA.

Based on the representation of the All India Confederation of Goods Vehicles Owners’ Association (ACGVOA) and also from the All India Motor Transport Congress, the Finance Ministry has exempted fully the levy of service tax on supply of goods carriage to GTA for use in transportation of goods by road.

“We are happy. Truck owners are grateful to the Government as it has responded to our demands. Truckers feel greatly relieved by the latest move of the Finance Ministry,” Mr Chittranjan Dass, Vice-President, ACGVOA, told Business Line. – Our Bureau (Source Businessline dated 27-6-08)