Whether service tax is payable on T.D.S. deducted on Freight

Dear Sir,

My quary is that, whether service tax is payable on the T.D.S. deducted on the Transportor bills and subsquently can we take CENVAT of the same ?

For Example:

Mr. "X" is an transportor who has raised bill of  Rs. 100.00 on carriage inward to M/s. XYZ . The accountant has deducted TDS - Contractor @ 2.06% and paid Rs. 97.04 to Mr. "X".

Since such services are covered under GTA, the accountant now has calculated a Service Tax Liability @ 12.36% on Rs. 100.00 and paid the same to Service Tax Department and also taken CENVAT of Rs. 12.36.

My quation is that, whether the accountant is correct or should he have calculated Service Tax 12.36% on Rs. 97.04 instead ?

If the accountant is correct will it be a case of Tax on Tax paid to govt. ?

Please explain in the light of the recent CBDT circular in case of 194-I where by TDS is not payable on Service Tax?