Emkay Global Financial Services maintained 'Buy' recommendation on IRB Infrastructure after the Commissioner of Service Tax levied a penalty of Rs 60.4 crore on account of service tax payable on toll collected by its subsidiaries Ideal Road Builders, IDAA Infrastructure and ATR Infrastructure.

"As our assessment of current service tax clause u/s 66D(h) and as per discussion with developers & tax experts, service tax is not be applicable on toll road companies prospectively. The management believes order is erroneous on interpretation of law & classification of service. Company to appeal against the order," the report said.

Analysts at Emkay point out that historical case laws and CBDT circulars favour the company.

"In the unlikely event of IRB loosing the appeal, it has enough safeguards available under concession agreement that will mitigate financial damage," they say. The brokerage has maintained 'buy' recommendation on the stock with a target price of Rs 230 per share.

At 02:20 pm. the stock was at Rs 122.55, down 1.68 per cent, on the BSE. It has touched a high of Rs 124 and a low of Rs 121 in trade so far.