The finance ministry is considering meeting a key demand of truckers by easing procedural issues and raising the abatement on service tax.

However, the All India Motor Transport Congress said the government should implement in "letter and spirit" a four-year-old agreement that gives them 75 per cent abatement on service tax payment for all services.

• Truckers' strike to hit economy

Over 4 million trucks stayed off the road today and prices of several commodities could rise if the strike continues. Nearly 40 million tonnes of goods are transported by road every day.

Transporters have been unhappy with notices issued in Delhi and Kolkata demanding service tax of 12.36 per cent on packing, warehousing and labour services. Transporters usually club freight charges with other service charges and make a composite bill for customers. Service tax is paid on 25 per cent of the bill since transporters get a 75 per cent abatement. In effect, a bill of Rs 100 attracts service tax on only Rs 25.

Service tax officials, however, have held that 75 per cent abatement applies only to freight charges and not other services.

The relief could now come by way of an increase in the abatement rate to offset the higher costs that transporters have to bear, Central Board of Excise and Customs member V Sridhar told reporters. To this end, the board has sought details on whether a goods transport agency provides a composite service or multiple services from different people.

In the latter case, a question arises of whether the independent services will be entitled to abatement or not. The department has sought details from transporters on this.