The All India Motor Transport Congress on Saturday called off their seven-day old 'indefinite' truckers strike after it reached an agreement with government on the contentious issue of service tax and various other demands.

Announcing the decision to end the agitation, AIMTC President B S Dhumal told reporters that a joint committee comprising representatives of truckers and government would look into the issues of service tax and tax deduction at source, while Revenue Secretary Vineeta Rai clarified that truck owners and operators were out of purview of the service tax.

The decision to withdraw the strike, which started on August 21, was reached after a marathon meeting lasting over nine hours at the end of which ministries of finance and surface transport signed two separate agreements with AIMTC.

As per the agreement signed by Rai on behalf of finance ministry and Dhumal for AIMTC "government will make suitable rules/notifications as required and also define commercial concerns and consignment note to make it clear that truck owners and operators are not required to pay or collect service tax."

The committee would submit its report within two months, Rai said, adding the government would take measures for the withdrawal of cases against the truckers arrested during the stir.

"Following the withdrawal of the strike, government will move the court to withdraw cases against truckers arrested under ESMA," she said.

The ground for the intense negotiations were prepared by CPM general secretary Harkishan Singh Surjeet after the failure of talks between AIMTC and finance ministry officials on Friday.

Dhumal profusely thanked Surjeet for his mediation to end the impasse and appealed to truckers to resume business.

Appreciating the procedural problems of refund of TDS by truck owners, Rai said: "Steps will be taken by the income tax department to simplify the problem of refund."

As per the second agreement, signed by Dhumal and Surface Transport Secretary Dhanendra Kumar, the government has agreed to examine the problems faced by the transport sector relating to scrapping of eight and fifteen-year-old vehicles.

The government would also request insurance regulator IRDA to "ensure that the insurance companies strictly follow the guidelines of IRDA issued from time to time and take suitable action against those companies violating the guidelines."

On the issue of toll tax, Kumar said the committee set up on the issue would be asked to make its recommendations soon, which would in turn be considered by the government. He said fresh directives would also be issued to the state authorities for ensuring safety on highways.

While Dhumal said the Committee on Service tax would have nine members of which six would be from AIMTC, Rai disagreed and clarified that the composition and other modalities would be firmed up in the next two-three days.

Asked about the revenue implication of the agreement, Rai said as such the government expected to collect about Rs 2,000 crore (Rs 20 billion) in a financial year from the booking agents but the impact of implementing the new measures would be felt after five months.