Tuesday, July 07, 2009
India: Shipping fraternity peeved with service tax on cargo movement
Tuesday, 07 July 2009
The shipping fraternity is peeved with the service tax levy on cargo movement through costal routes and inland waterways. They think it will kill the viability in these segments which anyways see minimal demand. Worse, they feel this will jack up prices of essential commodities like pulses, fertilisers and tea. It’s a different matter that FM Pranab Mukherjee feels the new service tax levy will not impact the prices of essentials or goods for mass consumption, as suitable exemptions would be provided. Be that as it may, Association of Shipping Interests in Calcutta (ASIC) chairman H.P. Nopany is not convinced. "Vessels requiring deeper drafts seldom enter Haldia or Kolkata Port. They usually unload a portion of their cargo at Sagar and Diamond Harbour and take the inland waterways to reach the ports. With a proposed service tax on cargo arriving through inland waterways and coastal routes, the prices of commodities like pulses, fertilisers and tea will undoubtedly rise," he points out.
"Only about 7% of total cargo moves through the coastal routes, and inland water-bound cargo is virtually non-existent. Inland water transport also doesn’t compete much with roadways. But in several countries bulk of the cargo movement is through inland waterways or through coastal routes," said Mr S Hajara, chairman and managing director, Shipping Corporation of India.
Interestingly, the centre and the state has been taking steps to revitalise the inland waterways route, but none of them have yielded any substantial results as of now. "A service tax at this juncture may dampen any demand, that may exist," adds Nopany.
During his speech, finance minister Pranab Mukherjee had said:, "In the goods transport sector, service tax is now levied on transport of goods by road, by air, through pipelines and in containers. However, goods carried by railways or those carried as coastal cargo or through inland waterways are not charged to service tax. In order to provide a level playing field in the goods transport sector, I propose to extend the service tax levy to these modes of goods transport."
Source: Economic Times India
