Ship Agents must get indemnified from mainline Container Lines for service tax levy
MUMBAI: Mumbai and Nhava Sheva Ship Agents Association has raised the undue hardships suffered by the ship agents with Finance Ministry officials following the onus for remitting service tax liability on pre-paid ocean freight.
In a meeting held with Joint Secretary of Tax Research Unit of Ministry of Finance last week, MANSA officials pointed out that the shipping agents were unable to verify the authenticity of the freight paid to the Ship Owner/Operator, therefore it would expose them to breach of Law and could be prosecuted.
Meanwhile, experts have pointed out that ship-agents or feeders operators must ensure that they are indemnified by the mainline container shipping lines for the service tax payable to absolve them of any liability occurring from recent levy.
“In case of slot charterers or vessel sharing etc. the same principle should be followed to safeguard the interest of the concerned ship agent who files IGM to the Customs,” said Capt. JS Gill, Managing Director of X-PRESS Feeders.
Capt. Gill was speaking at an interactive session on the recent service tax levy on pre-paid ocean freight by the Finance Ministry organized by Mumbai and Nhava Sheva Ship Agents Association.
Sharing his initial insights on the subject, Mr. Umesh Dalal, Director, Finance at NYK Line pointed out that the Government seems to have used the ship agent to enable Service Tax collection through a fewer entities, even though Ship Agent is not connected with the Transaction.
However, Mr. Josy John, Legal Manager of MSC Agency clarified that filing a writ in the Court of Law may not give any immediate relief neither any guarantee as to whether such legal action would give a desired result in the long run.
It is also doubtful whether such filing of a suit can be deemed as valid since the levy of service tax is not directly on the ship agent and he is merely a conduit to the transaction that took place abroad between foreign shipper and owner. It cannot therefore be termed as a violation of the fundamental right of the Citizen of India, John added.