IRB Infra gets Rs 288 cr tax relief

The highway developer had received notice to pay up as much as Rs 288 crore

An income tax tribunal today said that special purpose vehicles (SPVs) of road projects are not liable to pay service tax, as they are not “agents” of highway authorities.

The decision gave relief to highway developer IRB Infra which received a notice to pay up as much as Rs 288 crore.   

Last year the department sent an order to IRB claiming that special purpose of vehicles are “agents” of either of National Highways Authority of India (NHAI) or state authorities, as opposed to “concessionaires” to whom projects are allotted. After noting them as agents, tax department classified toll collection as a “business auxillary service”, and hence liable to pay tax.

The order also demanded service tax amount to Rs 288 crore, a penalty of equivalent amount, and interest for five years starting 2006-07.

“The Hon'ble Tribunal has allowed the appeal of these SPVs and observed that the appellants are not liable to pay service tax as they are not providing business auxiliary service to NHAI or state authorities. In this connection, the Hon’ble Tribunal set aside the entire demand of service tax raised by the Commissioner of Service Tax,” IRB said, in a communication to the stock exchanges.

IRB's stock went up by 1.6% today to close at Rs 124 per share, in today's trade.