Goods Transport Agency: Disputes Forever

Goods Transport Agency: Disputes Forever

Prepared By:

CA Pradeep Jain,

Ghanshyam Chaudhary

It will be very strange to see that the Indian budget is being presented and it does not have mention of service of “Transport of goods by road”. It has been a most litigant and most debated service under service tax. This year budget is no exception. There is a small amendment relating to this service.

Earlier, exemption from service tax was available for fruits, vegetables, eggs and milk under notification no. 33/2004-service tax, dated 3 December 2004 to goods transport agency by road.

But now, the scope of aforesaid notification has been expanded by including the word “food grains and pulses” in the list of exempted goods. This has been done by notification no. 4/2010-service tax, dated 27 February, 2010.

This has been done in order to reduce the prices of essential things. The inflation is sky rising. The Government intends to bring down the prices of essential commodities and hence the exemption is granted to the same. The outcome of the same will be that rates of grains and pluses will be reduced.

However, the levy of service tax has been introduced on transport of goods by rail. Earlier it was applicable on containerised cargo. It was levied in last budget also but it was withdrawn after the insistence of Railway minister. But this year, it is reintroduced with effect from April 1, 2010.

The list of essential things which are exempted by rail transport is too large. These are also essential items and exempted from service tax for public interest. The list is as under:-

*Sr. No.*	*Description of Goods*
1	Defence/ military equipments
2	Railway equipments/ materials
3	Postal mail bags
4	Relief materials meant for victims of natural or manmade disasters, calamities, accidents and mishap
5	Luggage of train passengers, whether carried as personal luggage in the train compartments or booked separately in the luggage van/ Household effects
6	Parcels [including newspaper/magazines registered with Registrar of Newspapers] booked in the luggage vans, where the goods/commodity heads fall below train load class 130 as per the Indian Railway Conference Association (IRCA) Goods Tariff
7	The following goods which are classified in the IRCA Goods Tariff, as below train load class 130 and wagon load class 130 (Formula: Train Load Class 120+10) including ‘Low Rate’ goods viz., LR1, LR2, LR3, LR4: Food grains, flours and pulses(9), Chemical Manure (6), Gunnies (21), Oil cakes and seeds (16), Soap (19), Starch (21), Salt for industrial use (18), Sugar (20), Salt (18), De-oiled cakes (16), Machinery and machine tools (14), Hides and Skins (12), Leather(12), Rubber and plastic (12), Jaggery (22), Jute (22), Milk and Milk products (22), Organic Manure (22), Paints and polishes (22), Timber (22), Vegetables oil pitches (22), Water (22), Fireworks (23), Boiler components (24), Charcoal(24), Paper (24), Bamboos (25), Brooms (25), Coffee and Tea(25), Cotton and other textiles (25), Fodder and Husk (25), Fruits and vegetables (25) and other perishables like fishery and marine produce, Groceries (25), Live stock (25), Motor

Thus, there are so many essential goods are exempted from service tax if transported by rail. Contrary to it, the list of exempted goods by road for GTA is not very small. The reason for the same is not clear. The Government thinks that these will be transported by rail only or the FM wants to make their counterpart Railway minister happy. Third possible answer could be that disputes are always attached to GTA.

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Goods Transport Agency: Disputes Forever

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