The Finance Ministry has clarified that transportation of milk by rail or a vessel will not attract service tax. This clarification has come in the wake of queries received from the Railways as to whether the service of transportation of milk is covered by an exemption notification issued in June 2012.

The expression ‘foodstuff’ specified in the exemption notification would cover ‘milk’ and hence no service tax will be applicable on transportation of milk by rail/vessel, the CBEC has said.

The CBEC notification — called mega exemption notification – issued in June 2012 specifically provides service tax exemption on transportation by rail/vessel of foodstuffs including flour, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages.