The Hindu : Andhra Pradesh News : Confusion in shipping trade over service tax

Online edition of India's National Newspaper
Wednesday, Sep 12, 2007
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Andhra Pradesh

Andhra Pradesh

Confusion in shipping trade over service tax

Correspondent

‘There should be clarity in classification ’

Port lends godowns on monthly rentals
Shipping agents demand clarification

Kakinada: Lack of clarity in the circular issued by the Central Board of Customs and Excise on the taxable services of the port services and the pattern to be adopted for classification of various services for the purpose of computing service tax has led to confusion among the shipping trade here .

The interpretation of law has been quite contradictory by both the Department and the trade that finally forced many of the shipping agents to prefer litigation. ‘The operations at the Kakinada port are totally different from that of the major ports administered by the Central Government.

The port here will not directly involve in any kind of cargo handling activity, which is done by the individual shipping agencies or the cargo-handling agents. They will make their own private arrangements for engaging cargo handling activity. Hence there should be clarity in classification of port services for computation of service tax’ said Dantu Suryarao, chairman of Cocanada Chamber of Commerce.

He told The Hindu here on Tuesday that the Port was collecting landing and shipping dues for the cargoes meant for import and export that is the only service the port is rendering unlike in major ports. Some times, he said, the por t would lend its godowns on monthly rentals to the cargo handling agents or the exporters, which is another service provided by the port occasionally.

Classification

‘We were served with a notice by the department for payment of Rs.4.5 crores towards service tax.

When we challenged the order questioning the interpretation on classification of service tax and the method of calculation of value of taxable service, we were given a relief of Rs.2.5 crores. All this is due to lack of proper clarity on interpretation of port services and the value of taxable service.

We have demanded the authorities to constitute a committee, at least in private, to study the problem in detail and define the taxable services and its value for computation of service tax, so that the confusion could be cleared and the litigation avoided,’ said another leading steamer agent. Similar is the case with majority of the shipping agents here.

They wanted clarification on the applicable classification for payment of service tax and method of calculation of value of taxable service if the cargo handling agent undertakes all the activities to his principles in respect of import and export cargoes at pre-agreed consolidated rate with a separate agency commission in the contract or without separate agency commission.

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