New Delhi, February 20, 2017
Container services were a “support service” of the Railways, as defined in 1994, and thus, the entire amount should attract service tax, instead of just on 30 per cent of haulage charges
The Container Corporation of India (Concor’s) shares closed at Rs.1,227 on the BSE on Monday, Rs.5.25 or 0.43 per cent over the previous day’s close.
Recently, BusinessLine had reported regarding a recent order of the Director General Central Excise Intelligence (DGCEI) that brought relief to Concor and several other container train operators of Indian Railways.
In an order issued on February 14, the DGCEI has dropped an earlier case through which the department had slapped a service tax demand in 2015 seeking Rs.700 crore from Concor and Rs.1,100 crore from the Railways.
The issue was whether containerised services offered by the Railways qualified for a 70 per cent abatement of service tax, which meant the Railways would charge a service tax only on 30 per cent of the freight amount charged by it to Concor and other container train operators. Another view taken by a section in the government was that container services were a “support service” of the Railways, as defined in 1994, and thus, the entire amount should attract service tax, instead of just on 30 per cent of haulage charges.
The recent clarity on the issue will also benefit other rail-based operators, such as the container train operations arm of Adani, Gateway Rail Freight, at a time when the Railways are facing competition from roads.
[The Hindu Business Line]