Days after he reduced Railway Minister Mamata Banerjee to tears at a Cabinet meeting,Finance Minister Pranab Mukherjee on Friday left the Trinamool chief fuming with his Budget proposals. In hiking petroleum prices and levying service tax on goods carried by the Railways,Mukherjee has not just hit Banerjees ministry but also her politics,those close to her said. While Mamata flew to Kolkata soon after the Budget,Trinamools chief whip in the Lok Sabha Sudeep Bandopadhyay aired her sentiments: We are very unhappy with the rise in prices of diesel and petrol. We were not consulted. It will further increase the pressure on the common man and therefore we demand a roll back. Party sources said they are planning a procession in Kolkata on Saturday to protest against the hike. Mamata had strongly opposed any hike in oil prices fearing that it could impact her electoral prospects ahead of the crucial elections to 80 municipalities across West Bengal,widely termed as a semi-final before the Assembly polls next year. Already annoyed over the fuel price hike Railways are the single largest diesel user in the country what really got Mamata furious was Mukherjees decision to withdraw the service tax exemption the Railways enjoyed on goods transportation. Exemption from service tax on service provided in relation to transport of goods by rail is being withdrawn. The levy will come into effect from 01.04.2010, stated the Memorandum Explaining the Provisions in the Finance Bill,2010. Amit Mitra,who heads an Expert Committee on Railways and is a close confidant of Mamata,said the move would severely hit the Railways finances and should be withdrawn. Stating that the Centre had given a budgetary support of Rs 16,752 crore to the Railways,Mitra was reported to have said that resumption of service tax amounted to taking back Rs 6,000 crore from the Railways. Officials said service tax on Railways was first imposed during last years Budget. However,on August 31,2009,transportation of essential commodities like foodgrains was exempted through a notification. The very next day,a new notification was issued exempting all the goods from service tax. With Railways projecting their Goods Earnings at around Rs 62,000 crore in 2010-11,even railway officials were quick to do the mathematics and come out with a figure of Rs 6,200 crore to be paid as service tax. However,by late evening,it was also pointed out that with a 70 per cent abatement on the 10 per cent service tax,Railways will actually have to pay close to Rs 1,860 crore. But even this would hit the Railways dearly given the hand to mouth situation it find itself in,officials said. The Ministry may be forced to hike freight rates to make up for this shortfall,sources said.
