This is really bizarre and worse than the earlier roll-backs. On all other services where service tax is imposed, the service provider is liable to charge the service tax, for eg: repairs and service, clearing and forwarding, interior and civil work, etc. But in the case of the service tax on goods transport, the government has buckled under the transport lobby’s pressure. And shifted the onus of taxing the transportation services to trade and industry.
No doubt, transportation services should be taxed. But this is certainly not the right way to collect the tax! When the same tax can collected from the minority service providers, why should you collect it from the user of the services?
The government should note that collecting tax from the transport service provider instead of trade and industry would have been easier and simpler, and the revenue too would have been the same. There are many grey areas which will lead to the harassment of trade and industry.
As per the extended definition, trade and industry would also include hospitals, co-op societies, educational institutions and anybody using transportation services. Does the service tax department possess the manpower and expertise to collect the tax from every nook and corner of the country?
—Sushil Mehra