Levy of Service Tax on Transportation of Goods by Rail - Service Tax - TCR/1078/2011/2

GOVERNMENT OF INDIA (BHARAT SARKAR) MINISTRY OF RAILWAYS (RAIL MANTRALAYA) (RAILWAY BOARD) No.TCR/1078/2011/2 New Delhi, -27.06.2012 The General Manager (Commercial), All Indian Railways Sub : Levy of Service Tax on Transportation of Goods by Rail. With reference to the above subject, it is to inform you that the Ministry of Finance (Department of Revenue) vide their notification No's. 7, 8 9/2012 dated 17.03.2012, had deferred the implementation of service tax on transportation of goods by rail till 30111 June 2012. While a final decision on the date of implementation would be intimated subsequently, broad guidelines relevant to the introduction of the regime are enclosed herewith by way of advance intimation with a view to familiarize the railways of the modalities. IT IS REITERATED THAT, THE LEVY OF SERVICE TAX SHOULD ONLY BE IMPLEMENTED ON RECEIPT OF CONFIRMATION FROM THE MINISTRY OF RAILWAYS. D.A. I As above. (Aastima Mehrotra) Jt. Director, Traffic Commercial (Rates) Railway Board No.TCR/1078/201112 New Delhi,:27.06.2012 Copy for information: - FA CAOs, All Indian Railways Rate Circular No./5 of 2012 GOVERNMENT OF INDIA (BHARAT SARKAR) MINISTRY OF RAILWAYS (RAIL MANTRALAYA) (RAILWAY BOARD) No.TCR/1078/201112 New Delhi, 27.06.2012 The General Managers, All Indian Railways. Sub:- Levy of Service Tax on Transportation of Goods by Rail. Ref:- Ministry of Finance Gazette Notification No 1 of 2006 Dated 1st March 2006 followed by Gazette Notifications I. 20 of 2006 dated 25th April 2006, II. 26 of 2006 dated 19th August 2009, III. 28 29 of 2009 dated 31st August 2009 IV. 33 34 of 2009 dated 1st September 2009, V. 8 9 of 2010 dated 27th February 2010, VI. 20,21 22 of 2010 dated 30th March 2010, VII.33,34 35 of 2010 dated 22"d June 2010, VIII.56 of 2010 dated 21st December 2010, IX. 20 of 2011 dated 30th March 2011 and X. 38,39 40 of 2011 dated 14th June 2011. XI. 7, 8 9 of2012 dated 17th March 2012. General: As per the Finance Bill 2010 and subsequent Gazette notification No 40 of 2011 on the subject, "Service Tax on 'Service provided in relation to transport of goods by rail' will come into effect from 01.07.2012 ". In compliance of the provisions contained in Finance Bill 2010 and subsequent notifications issued by Finance Ministry as referred to above following instructions are issued. 1. Certain commodities have been exempted from payment of service tax as per Ministry of Finance notification No. 25 of 2012 dated 20th June 2012. List of commodities, which have been exempted from levy of Service Tax is enclosed as Annexure-1. 2. As on date Service Tax is levied at the following rates. Service Tax 12%. Education Cess of 2% on Service Tax. Higher Education Cess of 1% on Service Tax. 3. Since an abatement of 70% has been permitted on freight for the taxable commodities, vide notification No. 13 of 2012 Service Tax dated 17.03.2012; Service Tax will be charged on 30% of total freight inclusive of all charges on goods which should be calculated as follows : i) Service Tax of 12% will be charged on 30% of freight (equivalent to 3.6% on the total freight); ii) Education Cess of2% on Service Tax will be added (equivalent to 0.072% on total freight); and iii) Higher Education Cess of 1% on Service Tax will also be added (equivalent to 0.036% on total freight) iv) Total Service Tax implication will be (i) + (ii) + (iii)= 3.708% on the total freight. Illustration- A: (In Rs.) Distance Kms 650 Wagon BCNA CC of Wagon Tonne 66 Rake Length 42 Commodity Cement Class T/L 150 1 Freight per tonne Rs. 738.60 2 Busy season surcharge @ 10% = (1*10%) Rs 73.86 3 Normal Tariff Rate (NTR) = (1+2) Rs. 812.46 4 Less Freight rebate for traditional empty flow direction @ 20% on NTR= (3*20%) Rs. 162.49 5 Freight per tonne for traditional empty flow direction@ 20% on NTR Rs. 649.97 6 Development Charge @5% = (3*5%) Rs. 40.62 7 $Terminal Charge @ 40.00 per tonne per terminal Rs. 80.00 (applicable only in Railway owned Goods Sheds/Sidings) 8 Total Freight = {3+6+7) Rs. 933.08 9 Total Freight per rake = (8*42*66) Rs. 2586497.76 10 Freight per tonne after concessions= (5+6+7) Rs. 770.59 11 Freight per rake after concessions = (10*42*66) Rs. 2136075.48 12 30% taxable freight of the total value Rs. 640822.64 13 Add Service Tax @12% on 30% Freight (12 * 12%) Rs. 76898.72 14 Add Education Cess @2% of Service Tax (13 * 2%) Rs. 1537.97 15 Add Higher Education Cess @1% of Service Tax {13 * 1%) Rs. 768.99 16 Total Rounded off Freight to be collected from one rake=(11+13+14+15) Rs. 2215281 Note:-$ Wherever applicable Note:- Service tax shall be rounded off to the nearest rupee as per circular No.ST-53/2/2003 dated 27.3.2003. Illustration- B: (In Rs.) Distance Kms 650 Wagon BCNA CC of Wagon Tonne 66 Rake Length 42 Commodity Cement Class T/L 150 1 Freight per tonne Rs. 738.60 2 Freight rebate under WIS- @10% on Basic Freight=(1*10%) 73.86 3 Busy season surcharge @ 10% on Base freight = (1*10%) Rs 73.86 4 Normal Tariff Rate (NTR) = (1+3) Rs. 812.46 5 Normal Tariff Rate (NTR) per Rake=(4*42*66) Rs. 2252139.12 6 Development Charge @5% = (4*5%) Rs. 40.62 7 $Terminal Charge @ 40.00 per tonne per terminal Rs. 80.00 (applicable only in Railway owned Goods Sheds/Sidings) 8 Total Freight = (4+6+7) Rs. 933.08 9 Total Freight per rake = (8*42*66) Rs. 2586497.76 10 Freight rebate under WIS scheme = (2*42*66) Rs. 204739.92 11 Total Payable Freight per rake = (9-10) Rs. 2381757.84 12 30% taxable freight of the total value 714527.35 13 Add Service Tax @12% on 30% Freight (12 * 12%) Rs. 85743.28 14 Add Education Cess @2% of Service Tax (13 * 2%) Rs. 1714.87 15 Add Higher Education Cess @1% of Service Tax (13 * 1%) Rs. 857.43 16 Total Rounded off Freight to be collected from one rake=(11+13+14+15) Rs. 2470073 Note:- $ Wherever applicable. Note:- Service tax shall be rounded off to the nearest rupee as per circular No.ST-53/2/2003 dated 27.3.2003. 4. To facilitate correct assessment, collection and payment of Service Tax, following instructions are issued : i. FA CAO of Zonal Railways will get themselves registered at the earliest and in any case within 30 days' time to get a Registration No. from the concerned Superintendent of Central Excise for proper accountal and remittance of Service Tax amount. . ii. Service Tax should be collected at the time of preparation of RR itself. Similarly, as regards 'To pay' RRs', Service Tax should be collected at the time of delivery of goods from 01.07.2012. iii. In case of RRs which are being manually prepared (non-TMS locations), only the Registration No., Code of service and details ofthe Service Tax, Education Cess, Higher Education Cess and Total Service Tax will be indicated on the RRs by Goods Clerks. iv. Till such time as changes are made in the TMS software, details mentioned in sub-para (iii) above will be manually written by the Goods Clerks in the computerized RRs also which will be generated at TMS locations. v. Meanwhile, CAO/FOIS will make provision for separate accountal of Service Tax in the TMS software for inclusion of relevant details in computerized RRs issued from TMS locations. The Computerised RRs will have separate indication for (a) Service Tax, (b) Education Cess, (c) Higher Education Cess and (d) Total Service Tax. Necessary changes should be made in the format of RR for inclusion of following entries : Name Address of customer. Registration No. of Service Tax provider i.e. FA CAO of zonal railway. Amount of Service Tax. Type of Service. Code No. of Service. Exemption Notification No.1 of 2006 ST dt. 1.3.2006 is being availed. vi. Till allotment of Registration No., Zonal railways will be required to mention 'Applied For' against the space provided for Registration No. TMS software will also print 'Applied For' in the Computerised RRs till such time as CAO/FOIS is intimated about their Registration Nos. by FA CAOs of Zonal Railways. vii. In case any undercharges or other charges are collected at the destination station, then service tax at the stipulated percentage should be collected by the destination railway on such other components also. viii It may be ensured that not only railway goods customers but also all Rail Operators such as Container Train Operators, SFTOs etc should pay Service Tax along with haulage charge. Further, where advance payment facility has been pe rmitted they would be required to pay Service Tax along with haulage charge. Similarly, element of service tax is levy able where 'Weight Only' system is in vogue. ix. It may be ensured that proper arrangement be made for up-keep of record from the initial stage itself for subsequent auditing by Service Tax Authorities. As each location would be audited periodically, system of correct maintenance of records is pre-requisite for its proper implementation. x. Instructions may be communicated to the staff at all levels regarding the relevant provisions of this tax and they may be made conversant with the various provisions for effective and efficient implementation ofthe same. xi. On the written request from customers, CCM Office will issue a monthly consolidated certificate to be signed by an Officer authorized by CCM and duly countersigned by Dy. CAO/T or officer nominated thereto, for each customer giving details of Service Tax collected from them during the previous month, date-wise and rake-wise with breakup of (a) Service Tax, (b) Education Cess, (c) Higher Education Cess and (d) Total Service Tax. This can be used by the customers for getting refund/credit of Service Tax from the concerned Superintendent of Central Excise as due to them. Service Tax once collected will not be refunded by Railways under any circumstances. xii. Each station/siding collecting the service tax shall submit a statement showing customer wise details of service tax collected from them during the previous month date-wise and rake-wise with breakup of service tax, education cess and higher education cess along with the station balance sheet to facilitate issue of the above certificate. xiii. In case of overcharge/refund of freight charges, if any, refund of Service Tax shall be claimed by the customer from the concerned Service Tax authority. No refund shall be made by the Railways on this account. For the purpose of claiming refund, CCM office shall issue a monthly certificate to each customer detailing the amount of refunds to the customer during the previous month, to be signed by an Officer authorized by CCM, which shall be countersigned by the Dy.CAO/T or officer authorized by them for this purpose. xiv. Since service tax due in case of undercharges detected at the destination station will be recovered by the destination station, the station will maintain separate record of service tax so collected. It shall also prepare a monthly statement showing customer wise details of invoice, undercharges and service tax/ cess collected thereon to be submitted along with the station balance sheet to Traffic Accounts office. 5. Service Tax will be levied on the total freight as reflected in RR. 6. It is suggested that various documents like Service Tax, relevant notifications etc. may be obtained and all concerned may be made well conversant with the same. Provisions pertaining to Service Tax are available in Finance Act, 1994 and Service Tax Rules, 1994 as amended subsequently from time to time. Some of the relevant notifications are Notification No. 1 of 2006 - Service Tax dated 01.03.2006, No. 8 of 2010 - Service Tax and No. 9 of 2010 - Service Tax dated 27.02.2010 issued in this regard may be obtained directly from CBDT or accessed from website of Central Board for Direct Taxes (CBDT). 7. Instructions regarding Registration No, head of allocation, accounting procedure, system of making payment etc. are being issued separately by the Accounts Directorate. 8. Any modification in the policy made by Ministry of Finance from time to time will become applicable and will be notified accordingly. 9. The date of implementation of levy of service tax shall be intimated shortly. This letter issues as an advance intimation of the proposed levy of service tax. Zonal Railways may take suitable action accordingly. This issues in consultation with Finance Directorate of Ministry of Railways. D.A./ As above. (Aashimla Mehrotra) Jt. Director, Traffic Commercial (Rates) Railway Board No.TCR/1078/201112 New Delhi, 27.06.2012 Copy for information: - 1. FA CAOs, All Indian Railways. 2. Deputy Comptroller and Auditor General oflndia (Railways), New Delhi. For Financial Commissioner (Railways) No.TCR/1078/201112 New Delhi, 27.06.2012 1) Chief Commercial Managers, All Indian Railways. 2) Chief Operating Managers, All Indian Railways. 3) Managing Director, CRIS, Chanakya Puri, New Delhi-23. 4) The Chief Administrative Officer, FOIS, Northern Railway, Camp: CRIS, Chanakya Puri, New Delhi-23. 5) Managing Director, Konkan Railway Corporation, Belapur Bhavan, Sector -II, CBD Belapur, New Mumbai-400614. 6) Director General, Railway Staff College, Vadodara. 7) Director, Institute of Rail Transport Management (IRTEM), Manaknagar, Lucknow. 8) GS/IRCA, New Delhi : for necessary action. (Aashima Mehrotra) Jt. Director, Traffic Commercial (Rates) Railway Board Copy to:- CRB, FC, MT, ME, MS, ML, MM AM (C), AM (T), AM (C IS), AM (T C), Adv(R), Adv (F), Adv (Vig.), Adv (Infra) EDTT (M), EDTT (S), EDTT (F), EDFM, EDPM, EDPG, EDFC, ED(C IS), EDV(T), EDP, EDPP, EDPPP, ED (T C), ED (S E), ED (LRDSS), DF(C), DTC (G), DPM, Dir (T C), DFM, DTTG, DTT (POL), DDTC(R) TC (CR), TC-I, TC-II, TC-III, TC-IV, TC (FM), TT-l, TT-II, TT-III, TT-IV, TT-V, FC, Stat-II, Stat (CA), Stat-V, Stat (Econ.), Economic Cell and Budget branches of Railway Board. ANNEXURE-I Table showing the description of Goods on which Service Tax is not to be levied S.No. (20) Description of Goods (a) Petroleum and petroleum products falling under chapter heading 2710 and 2711 of the first schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (b) Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; (c) Defence or Military equipments (d) Postal mail or mail bags (e) Household effect:- (f) Newspaper or magazines registered with registrar or newspapers: (g) Railway equipment or materials; (h) Agriculture produce: (i) Foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or (j) Chemical fertilizer and oilcakes;