The government today said goods transport agencies engaged in ferrying goods through road will be exempted from 12.36 per cent service tax applicable for providing ancillary services like packaging, transshipment and warehousing provided these are not outsourced.

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"If any ancillary, intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part of GTA service and the abatement of 75 per cent would be available on it," said a circular issued by the Central Board of Excise and Customs.

The circular follows the assurance given by the government last month to the All-India Motor Transport Congress, which went on a nation-wide strike on the issue and a hike in toll tax.

The GTAs, which provide transport services by hiring or their own trucks, have to pay service tax on 25 per cent of the billing amount.

However, they had complained that tax officials were also demanding tax on ancillary services such as packaging, temporary warehousing, loading and unloading that are provided by them as part of the transport service.

The CBEC clarified that so long as the entire transportation of goods is by road and the person transporting the goods issues a consignment note, it would be classified as GTA service.

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Commenting on the decision of the government, AIMTC President Charan Singh Lohara said, "We are not satisfied with the decision as the Finance Ministry has not included delivery agents, booking agents under the GTA service that was agreed in the written agreement signed by government officials and our association."