Modifying yesterday's decision, the Ministry of Railways today said that Service tax on passenger's fares in all AC classes and first class trains will not be levied on tickets purchased before the 1st of October. In a statement issued in New Delhi, the Ministry has said, since service tax is leviable from the 1st of next month, hence it will be collected on the tickets issued on or after that date.

The earlier order of the Railways stated that the service tax will apply to tickets issued in advance for journeys to commence on or after the date of its implementation. Fares of all AC Classes and first class trains will go up by 3.7 per cent from next month with the service tax coming into force.

In another modification, the Ministry has said, in case of cancellation of tickets booked by the passengers on or after the 1st of October, the applicable amount including refundable Service Tax amount, will be refunded by the Railways.

It had earlier said that refund of service tax shall be claimed by the passengers from the concerned Service Tax Authority.