MANSA : Conclave On Service Tax On Prepaid Import Ocean Freight Organized

Arising out of the recent introduction by Ministry of Finance, GOI to levy Service Tax on the prepaid Ocean Freight, MANSA organized a Conclave for its Members on 28th February 2017 in MANSA Conference Hall to deliberate and discuss the ways and means of coping with the new liability thrusted on them. Capt. Dhananjay Javadekar, Executive Committee Member coordinated along with YMF team member Satish Todurkar, roped in Mr. Umesh Dalal, Chief Finance Officer, NYK Line to give an analysis and perspective of the new tax regime. Mr. Umesh Dalal has over 30 years of service in this field and is a highly knowledgeable and eminent speaker in Maritime trade financial matters. Capt. J. S. Gill, MD of Express Feeder Services gave a perspective of Feeder Operators. He has an experience of over 20 years in Feeder Operations alone. Mr. Josy John, Legal Manager of MSC Agency gave a talk on the legal aspects and suggested ways forward. The Speakers were welcomed and introduced by Capt. D. V. Javadekar with details of their background and experience.

Mr. Umesh Dalal dwelt on History of Service Tax right from its inception and extension further of its applicability time to time on Export and Import freight. He also described how this finally and perhaps incidentally came on to the shoulders of Ship Agents. The Government studied indepth and found a link may be very weak to corner the Indian representative (Ship Agent) and made him responsible and liable for payment of Service Tax on behalf of the foreign shippers and owners of the vessels on whom the Government cannot exercise any control. This is coming out of the grievance from the Indian Ship Owners who are at a disadvantage since they have no escape from levy of service tax. Instead of giving relaxation to the indigenous Ship Owners the Government deliberately made Service Tax applicability through Ship Agents on foreign Principals. After analyzing all the issues he expressed that the Ship Agents have options in his view like representing to the Government OR a legal route by filing Writ seeking stay OR pressurizing through diplomatic channels by their foreign Principals.

Capt. J. S. Gill expressed that the Feeder Operators who are carrying the containers of various Main Line Operators have to ensure that the respective Main Line Operators either pay to Ship Agent or execute an indemnity indemnifying the feeder operator (Ship Agent) that the Service Tax payable by them shall be paid by them and the Ship Agent is absolved of all the responsibility. 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.

Mr. Josy John has clarified that filing a Writ in the Court of Law may not give any immediate relief neither any guarantee is there whether such legal action gives 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.

Thereafter the team of Speakers has fielded the questions from the participants and anxious queries on the outcome of the Appeals made to the Government.

The Vote of Thanks was given by Mr. Hiren C. Ved, Vice-President of MANSA appreciating the Speakers efforts to clear the doubts of the Ship Agents representatives and Capt. Javadekar for organizing this relevant Conclave on the current burning topic well attended by over 40 MANSA Members. The Speakers were felicitated by a bouquet of flowers and a Plaque each by the Vice-President of MANSA.