The transporters were upset with notices issued to them by service tax field formations in Delhi and Kolkata asking them to pay service tax at the rate of 12.36 per cent on packing, warehousing and labour services used in cargo handling, considering them as independent services.
Usually, transporters club freight charges along with other service charges like loading, unloading and storage.
They make a composite bill for customers. Service tax is paid on 25 per cent of the bill amount as transporters get 75 per cent abatement. In effect, if the bill is for Rs 100, service tax is to be paid only on Rs 25.
Apparently, service tax officials have held that 75 per cent abatement is only on freight charges and not for other services, on which they have to pay tax on the full amount.
More From This Section
When the abatement scheme was launched in 2004, many services were not taxed at that moment but have now become taxable and may have increased the cost of inputs for transporters.
The relief could come by way of an increase in the abatement rate to offset increased cost to transporters, the CBEC officials said.
"The government is considering this. We are hopeful of finding a solution. May be, if we decide on this, they (transporters) may get more abatement," the Central Board of Excise and Customs member V Sridhar told reporters.
However, officials point out that there are procedural issues like whether a goods transport agency is providing a single composite service or there are multiple services provided by different people like freight service by one person and storage and ground handling service by others. In that case, a question arises whether the other independent services will get abatement or not.
The department has sought details from the transporters in this regard.
So, the facts of a case will determine whether transporter is providing composite service or not. If a transporter is providing a composite service including ground handling and storage, then there is no issue.
Any procedural difficulty in this regard will be addressed by fresh gudelines, officials added.
Service tax collection from goods transporters were Rs 2,475 crore in 2006-07 and it rose by 14 per cent to Rs 2,833 crore in 2007-08.
Besides service tax, the transporters are protesting against toll tax, diesel price and speed governors and mechanical tax.