However, the goods transport agencies, who were also seeking exemption from service tax, are disappointed that they will have to pay the tax.
"We are relieved with the finance ministry explaining that truck owners are in no way liable to pay service tax," said Chittranjan Dass, vice-president, All India Confederation of Goods Vehicle Owners' Association.
In this year's Budget, services provided in relation to supply of tangible goods for use without transfer of possession and effective control were made a separate taxable service. Consequently, supply of goods carriages to goods transport agencies without transfer of possession was made taxable at the rate of 12.36 per cent (including education cess).
The relief sought was on various grounds, including that the service tax paid on renting of goods carriages without the right of possession and effective control could not be taken as input credit for payment of service tax towards the GTA service.
Service tax for transport services is payable only on 25 per cent of the amount charged for providing the service. The balance is exempt. In view of this provision, transporters are not entitled to take input credit under the Cenvat credit scheme on goods and services.
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Moreover, service tax for transport services provided in seven specified cases is not required to be paid by the transporter but by the person making the payment towards the freight, the ministry noted.
"The notification is targeted at dividing truckers and goods transport agencies so that the general strike that we have called from July 2 can be scuttled. But we have asked the finance ministry to define what is a goods transport agency. We are meeting ministry officials tomorrow," said executive committee member, All India Motor Transport Congress, Rajiv Gupta.