Truckers across the country stopped ferrying goods on Wednesday, as part of an indefinite strike to push for abolishment of toll tax and rationalisation of duty of diesel. Meanwhile, tax authorities said that they were thinking of providing relief to transporters on service tax.

The strike that started in the early hours of today was called by the All India Motor Transport Congress (AIMTC), which claims the support of all state transporters' association with a combined fleet size of 48,00,000 trucks.

Talks this morning between the apex body of transporters and the Union Highways, Road Transport Minister T R Baalu to thrash out a solution collapsed. "We will continue with the indefinite strike," AIMTC president Charan Singh Lohara said the meeting. 

On Wednesday, he had said that truckers want the advalorem duty on diesel to be replaced with a fixed rate of duty on per litre of the fuel.

AIMTC has alleged that the government is encashing the international crisis on crude oil prices many-fold and forcing the truckers to buy premium diesel at higher and unregulated prices.

Govt may offer service tax relief to transporters

Tax authorities have said they are considering providing relief to transporters on service tax, one of the issues against which the truckers went on strike from Wednesday.

"We are ready to consider the demand of goods transport agencies (GTAs) for enhancing the abatement rate from the present level of 75 per cent," Central Board of Excise and Customs member V Sridhar said.

Abatement rate is deducted from the total billing amount of service provider to arrive at tax liability.

CBEC is expected to meet with the representatives of the industry later in the day, and the issue could be handed over to a committee before taking a final decision.

He said the truck owners, who provide trucks to goods transport agencies (GTAs)on rent, have already been fully exempted from payment of service tax.

At present, the GTAs have to pay 12.36 per cent service tax, including cess on the 25 per cent billing amount provided they do not take any credit on payment of tax on inputs.

Sridhar said there is a case to revisit abatement rate for GTAs considering that about four years ago, when service tax was introduced for the industry, the abatement rate was fixed only to set off the excise payment on diesel.

While service tax was imposed on other services like warehousing, packaging, loading and unloading, he said, the abatement rate has not been changed. Now there is a case to revisit the abatement rate.

The transport industry paid service tax of Rs 2,833 crore (Rs 28.33 billion) in 2007-08, while in 2006-07 it was Rs 2,475 crore (Rs 24.75 billion).

Truck operators are also demanding exemption from payment of toll tax, introduction of specific duty rates on diesel.

Trucks in Mumbai came to a standstill following transporters' strike. | Photograph: Arun Patil