The Hindu Business Line : Govt clarifies on service tax, but truckers firm on strike

IN a bid to avert the strike by transporters from Saturday, the Government has said that the service tax is proposed to be levied on transport booking agents and not on truck operators and owners.

"The Government appreciates the positive role of the associations which have understood the true intent of this levy and are therefore not joining the strike, in particular, the All India Confederation of Goods Vehicle Owners' Association. The Government will extend all possible support to their normal business activities," a Finance Ministry statement said here on Friday.

Terming the proposed strike as "unwarranted and against the interests of the general public, the Government has urged the All India Motor Transport Congress (AIMTC), representing a section of the road transport industry, to back out of the strike.

During discussions between the two sides, the Government has assured AIMTC that any procedural difficulty in implementing the proposed service tax would be sorted out. In fact, the Government has set up a committee comprising representatives from the transport industry, including members of the AIMTC and officials of the Finance Ministry, to look into the genuine procedural problems.

"Further, the Government has agreed to consider suitable abatement in service tax," the statement said.

The Government has described as "totally un-true" the claims made by AIMTC that the proposed levy violates the agreement reached between the transport sector and the Government in 1997. "It is not a violation of the 1997 agreement as the proposed levy is only on transport booking agents and not on road transport operators or truck owners. In the agreement signed in 1997, the AIMTC was not against the levy of service tax, but only wanted the mode of collection to be changed in such a manner that the tax would not be collected from the road transport operators," the statement said.

AIMTC, however, is not in a mood to listen to the Finance Ministry and has sent a "final appeal to the Prime Minister" to intervene and salvage the situation. " Even at this late stage, if the Prime Minister intervenes, the situation may come under control. Otherwise, the strike will begin from Saturday," Mr J.M. Saksena, Secretary General, AIMTC, said.

The AIMTC does not buy the Finance Ministry argument that transport operators and truck owners will be kept out of the service tax net. The term transport operators includes anybody who runs or controls any of the activities in the transport industry which may mean/ include/ consists of truck drivers, truck owners, brokers and booking agents, he explained.

"So, if I as a truck owner do my bookings, will I be exempted from the payment of service tax," he asks. Only a negligible percentage of the total trucking industry functioned as pure goods booking agents.

"Most of the booking agents also own trucks. If they own trucks, will they be exempted from service tax," he wondered.

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