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karan sharma (Querist)

27 August 2014 Today i booked a ticket from jammu to delhi
and then jammu to katra
why the service tax is charge by indian railway on both transaction.??
place of provision as per rule 11 is starting point which is non taxable territory (jammu)

WHY THE SERVICE TAX IS CHARGE BY INDIAN RAILWAY????

Annu Agarwal

Annu Agarwal (Expert)

27 August 2014 Your contention is correct to the extend that as per Rule11 of POP Rules,place of provision in case of transporatation of passengers is the place where the passenger starts the journey i.e in the present case Jammu.Jammu is a non-taxable territory,this mean the services are provided from non-taxable territory.

As per my view ,Now if you refer to notification no.30/2012 serial No.10 which says that in respect service provided by a person located in a non-taxable territory,the service tax liabiity is to be discharged by service receiver under reverse charge .Therefore the railways has recovered the service tax from the passenger.

I would like other experts to share in their views.

Message likes : 1 times

karan sharma

karan sharma (Querist)

27 August 2014 Thanks Annu ji

But as per NOTIFICATION NO. 30/2012 SERIAL NO. 10 SERVICE TAX LIABILITY DISCHARGE UNDER REVERSE CHARGE.
IN PRACTICAL CASE I THINK NO PASSENGER IS DEPOSITING SERVICE TAX ON BEHALF OF INDIAN RAILWAY
INDIAN RAILWAY HIMSELF DEPOSITS SERVICE TAX TO CENTRAL GOVT. UNDER NORMAL CHARGE AND REVERSE CHARGE NOT APPLICABLE ON INDIAN RAILWAY .
Under reverse charge service receiver deposit service tax to central govt so how we apply notification no. 30 on indian railway
Correct me if i am wrong mam.

Nischit Sanghavi

Nischit Sanghavi (Expert)

28 August 2014 When the consumption of Service Tax is outside Jammu and kashmmir then service tax is leviable.

karan sharma

karan sharma (Querist)

28 August 2014 Nischit sir Which clause???

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

02 August 2025 Here’s a clear explanation addressing your concern about Indian Railways charging service tax on Jammu to Delhi and Jammu to Katra tickets:

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### Why Service Tax is charged even though Jammu is a non-taxable territory?

1. **Place of Provision Rule (POP Rule 11):**
The place of provision for passenger transport services is the **starting point of the journey**. Since Jammu is in a non-taxable territory (Jammu & Kashmir), theoretically, no service tax should be levied there.

2. **Notification No. 30/2012 - Reverse Charge Mechanism:**
This notification says if the **service provider is located in a non-taxable territory**, the **service tax liability shifts to the service receiver** under reverse charge.

3. **Indian Railways’ Position:**
Indian Railways is a **government entity** and service provider. It **cannot shift tax liability to passengers** under reverse charge. Hence, Indian Railways **charges service tax on the tickets as normal (not reverse charge)** and **deposits it directly to the government**.

4. **Why Both Tickets Are Charged?**
Even though Jammu is a non-taxable territory, when the **service (journey) ends in Delhi or Katra (taxable territories)**, the **service tax is levied as per consumption of service in taxable territory**. The tax is on the **value of transportation service provided**, irrespective of the start point being in a non-taxable territory.

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### Summary:

* Jammu is a non-taxable territory, but the **service tax applies because the journey ends in taxable territory (Delhi/Katra).**
* Indian Railways **cannot use reverse charge on passengers** and **charges service tax directly**.
* The service tax charged on both segments is valid as each segment is treated as a separate taxable supply.

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If you want, I can help you with the relevant sections and notifications for your reference. Let me know!

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