Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
(Tax Research Unit)
Circular No. 152/3 /2012-ST
New Delhi, 22nd February, 2012
To
Chief Commissioner of Customs and Central Excise / Central Excise & Service
Tax (All)
Director General of Service Tax /Central Excise Intelligence /Audit
Commissioner of Customs and Central Excise/ Central Excise and Service Tax/
Service Tax (All)
Madam/Sir,
Subject: Toll in the nature of ‘user charge’ or
‘access fee’ paid by roads users — regarding.
A representation has been received by the Board, seeking clarification
regarding leviability of service tax on toll fee (hereinafter referred as
‘toll’) paid by users, for using the roads. The representation has been
examined.
- Service tax is not leviable on toll paid by the users of roads, including
those roads constructed by a Special Purpose Vehicle (SPV) created under an
agreement between National Highway Authority of India (NHAI) or a State
Authority and the concessionaire (Public Private Partnership Model,
Build-Own/Operate-Transfer arrangement). ‘Tolls’ is a matter enumerated (serial
number 59) in List-II (State List), in the Seventh Schedule of the Constitution
of India and the same is not covered by any of the taxable services at present.
Tolls collected under the PPP model by the SPV is collection on own account and
not on behalf of the person who has made the land available for construction of
the road.
- However, if the SPV engages an independent entity to collect toll from users
on its behalf and a part of toll collection is retained by that independent
entity as commission or is compensated in any other manner, service tax
liability arises on such commission or charges, under the Business Auxiliary
Service [section 65(105) (zzb) read with section 65(19) of the Finance Act,
1994].
- Further, an SPV formed as a result of agreement between NHAI or State
Authority and the concessionaire under the BOT arrangement, cannot be considered
as an agent of the NHAI. Renting, leasing or licensing of vacant land by the
NHAI or State Authority to an SPV for construction of road and such construction
do not attract service tax.
- This Circular may be communicated to the field formations and service tax assessees, through Public Notice/ Trade Notice. Hindi version to follow.
(Samar Nanda)
Under Secretary, TRU
Tel/Fax: 011-23092037
F.No.354/27/2012-TRU