The Hindu Business Line : Govt must clarify tax on port services: FICCI

THE Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the Finance Ministry to clarify on the problems faced by the corporate sector due to imposition of service tax on port services.

"An appropriate clarification may be issued to make it abundantly clear that services of cargo handling for all goods meant for export and `mere transportation' of cargo provided in/by a port as port service, is excluded from the scope of levy of service tax under port service, in harmony with its treatment under the category of cargo handling service," a chamber official said.

While port services for the purposes of levy of service tax continued to be in force, other services came to be categorised as taxable services later.

One such service - cargo handling - was brought into effect on August 16, 2002.

The Government had recognised a degree of overlap between the nature of the taxable service in relation to port services and that of cargo handling services and clarified the same, FICCI said.

However, notwithstanding the clarification, anomalies and inequitable positions remain, it added.

In a letter to the Finance Ministry, the Chamber said, "It appears that to avoid double levy, it was clarified that cargo handling service when provided in/by the port, should be taxed only under the category of port services.

"From the definition of cargo handling service, the clarifications issued by the Central Board of Excise and Customs (CBEC) and in the interest of exports it is clear that Government never intended to tax services of handling of export cargo and services of `mere transportation' of cargo."

It added: "It, therefore, follows that handling of export cargo and `mere transportation' of cargo, if carried out in/by ports including other ports, should not be levied to service tax under the head port services as well."

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