IRB Infra shares fall after service tax demand of Rs. 60 cr
September, 11th 2012
Shares in IRB Infrastructure traded lower Tuesday after the company said the income tax department has slapped a service tax demand of Rs. 60.46 crore.
"The demand is on account of service tax payable on toll collected by some of our subsidiaries viz. Ideal Road Builders Pvt. Ltd, IDAA Infrastructure Pvt. Ltd, and ATR Infrastructure Pvt. Ltd., for FY06-07 to FY10-11," the statement said.
At 11.50 a.m., the stock traded 2 per cent lower at Rs. 122.25 on the BSE.
The company further said that the I.T. department may extend this logic to other SPVs (special purpose vehicles) and may pass similar orders for other SPVs. In such case, the total demand on account of service tax payable, for those subsidiaries of IRB, 111 aggregate, may come to approx. Rs. 230 crore for FY06-07 to FY10-11.
The company said it will file an appeal as no service tax is levied on toll paid by users, so the demand for service tax is erroneous.
In the worst case scenario, the National Highway Authority of India will have to reimburse the company for any cost over-runs arising due to change in taxes or change in interpretation of any law, IRB Infra said.