Service tax on environment compensation charges
This query is : Resolved
Sandeep Salve
(Querist)
07 December 2015
The Delhi Government in compliance with the orders of Hon’ble Supreme Court of India has imposed “Environment Compensation Charge” (ECC) w.e.f. 1st November, 2015 on commercial vehicles entering Delhi.
The issue is whether service tax is applicable on ECC.
The issue is whether service tax is applicable on ECC.
CA R SEETHARAMAN
(Expert)
07 December 2015
Service tax not applicable on ECC as it is not a service.
Sandeep Salve
(Querist)
08 December 2015
The onus to pay ECC is on the driver or the owner of the vehicle. It is not on the consignor or consignee of goods.
Sub-rule (1) of rule 5 of Service Tax (Determination of Value) Rules, 2006 states that :
“Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service”.
Hence, I believe that service tax is payable on ECC.
You will also find that in case of rent a cab, the service provider considers toll charges as part of value of service and collects service thereon.
Request you to throw light on this.
Sub-rule (1) of rule 5 of Service Tax (Determination of Value) Rules, 2006 states that :
“Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service”.
Hence, I believe that service tax is payable on ECC.
You will also find that in case of rent a cab, the service provider considers toll charges as part of value of service and collects service thereon.
Request you to throw light on this.
CA R SEETHARAMAN
(Expert)
08 December 2015
I agree with you provided it is included in the freight and claimed from the consignor/consignee.
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