Once a service is brought into the service tax net the provisions of the service tax and rules are to be complied with. In order to comply with the same the entity may issue circulars to their personnel indicating the procedure to be followed. Railway is not an exception to this. Railway Board has also issued circulars from time to time for compliance of the provisions which may be discussed in this article.
Instructions
Vide No. TCII/2910/2012/Service Tax, dated 25.06.2012 instructions were issued for the compliance of provisions as detailed below:
- Service tax would be levied on the fare of passenger services on the following classes-
- A/C First class;
- Executive class;
- AC – 2 tier class;
- AC – 3 tier class;
- AC Chair car class;
- AC economy class;
- First class.
- Since an abatement of 70% has been permitted on passenger services, vide Notification No. 13/2012-ST, dated 17.03.2012 service tax will be charged on 30% of total fare including reservation charge, development charge, super fast surcharge etc., which should be calculated as follows:
- Service tax of 12% will be charged on 30% of fare (equivalent to 3.6% on the total fare);
- Education cess of 2% on ST will be added (equivalent to 0.072% on total fare); and
- Higher Education Cess of 1% of ST will also be added (equivalent to 0.036% on total fare);
- Total service tax implication will be 3.708% on the total fare.
- No service tax will be levied for duty pass, privilege pass, any other complimentary passes etc., where no money transaction is involved;
- On concessional value of tickets/PTO tickets service tax will be levied on 30% of the total fare actually collected from the passenger;
- In case of cancellation of tickets by the passengers service tax will not be refunded by Railways;
- The service tax will also apply to tickets issued in advance for journeys to commence on or after date of implementation of ST. In the case of tickets already issued excluding service tax, it should be ensured that the ST on total fare is recovered either by TTEs in the train or by the booking offices before the commencement of the journey by the passengers;
- Zonal Railways are to register themselves with the Department;
- ST should be collected at the time of issuing the ticket itself;
- 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;
- Instructions may be communicated to the staff at all levels regarding the relevant provisions of service tax and they may be made conversant with the various provisions for effective and efficient implementation of the same.
- In case of refund of passenger fare, if any, refund of service shall be claimed by the passenger 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 certificate to passenger detailing the amount of refunds to be signed by an officer authorized by CCM, which shall be countersigned by Dy.CAO or officer authorized for this purpose. The said instruction has been amended by Commercial Circular No. 59/2012, dated 28.09.2012 indicating that in case of cancellation of tickets booked by the passengers on or after 01.10.2012, ST can be refunded by Railways except for the portion of ST on the amount of cancellation charges retained by the Railways.
Implementation
Vide their commercial circular No 58/2012, dated 26.09.2012 it was advised that the service tax on transportation of passed by rail would be levied with effect from 1.10.2012.
Service Tax on auxiliary services
Vide No. 2004/TG-IV/39/24/Service Tax pt iii, dated 26.09.2012 it has been informed that the following auxiliary services have been exempted from the levy of service tax with effect from 01.07.2012:
- Selling of space or time slots for advertisements other than advertisements broadcast by radio or television;
- Services by way of motor vehicle parking to general public excluding leasing of space to an entity for providing such parking facility, as per Notification No. 25/2012-ST, dated 20.06.2012, para 24;
- Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories urinal or toilets, as per Notification No.25/2012-ST, dated 20.06.2012, para 38;
- Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below ₹ 1,000/- per day or equivalent, as per Notification No. 25/2012-ST, dated 20.06.2012, para 18;
Procedure for refund of service tax
Vide Circular No. 60/2012, dated 29.09.2012 the procedure for refund of service tax has been enumerated.
- Service tax will be leviable only on the cancellation/clerkage charges retained by the Railways at the rate of 3.708% on the charges retained. The remaining portion of ST collected at the time of booking shall be refunded along with the refundable fare portion;
- This will be applicable only to cancellation of AC Class/First Class tickets booked by passengers on or after 01.10.2012;
- In case of cancellation of AC class and First class tickets booked on or after 01.10.2012, service tax to be refunded would be done manually by Railways at the booking counters. In order to facilitate the refund process, the amount to be refunded would be displayed through PRS on the cancellation form itself of the PRS terminal;
- The accountal of the amount of service tax refunded manually shall be maintained in a separate register. The details of service tax refunded shall also be endorsed on the cancellation ticket by the booking clerk.
- For cancellation of e-tickets including dropped waitlisted e-tickets, IRCTC will refund the service tax to passengers from the e-ticketing front-end application and account for the same with Railways. The details of the amount of service tax to be refunded on the cancelled e-tickets would be sent by PRS to IRCTC while cancelling the tickets and service tax should be refunded in the same manner as refunds done for other cancelled tickets.
Service tax on additional categories
Vide circular No. 62/2012, dated 10.10.2012 instructions were issued for the levy of service tax for the following category of services:
- Special train/coaches on FTR (for AC classes and first class);
- Special trains for film shooting (For AC classes and first class);
- Season ticket (first class);
- Circular journey tickets (for AC classes and first class);
- Excess Fare ticket for extension of journey, traveling without ticket, un booked/excess luggage of passengers, lost ticket/mutilated ticket, up gradation of tickets in AC or first class etc.,
It was further advised that the service tax @ 3.708% will be levied on the total charges of special train/coaches which include the full Security deposit also. At the time of refund of security amount, the proportionate amount of service tax would also be refunded.
Service tax on verification of journey details
Vide Circular No. 25/2012, dated 11.06.2014 issued clarification as to whether service tax should be levied on charges being realized for LTC verification. It was clarified that any service not falling within the negative list and exempt list circulated by Ministry of Finance would be taxable. Since the charges realized for verification of LTC details do not fall in the negative list and exempt list circulated by Ministry of Finance, Zonal Railways should realize service tax on these charges.
These circulars may also be useful to the passengers traveling in trains.
