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No service tax is payable on toll collected from road users, says the Finance Ministry clarification dated February 22.
The special purpose vehicle (SPV) formed for operating expressways and roads collect toll for themselves and not for the one who has made the land available for construction of roads such as the National Highway Authority of India (NHAI), which enters into a renting, leasing or licensing arrangement with the SPV, none of which is liable to service tax. If, however, the SPV engages the services of someone to collect tolls and pays him commission for his services, then service tax would be payable on the commission as it would fall under business auxiliary service that has been notified for levy of service tax.
(The author is a New Delhi-based Chartered Accountant)
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