27 April 2009
The defintion of taxable services in most do not provide any exemption to government. What is taxable is defined in Section 65 (105)... In common understnading, the Sovereign functions are normally not to be charged with service tax. Example the telephone bill to the police would carry ST as also any insuracne or other taxable services consumed by them. Each of the 104 service may have to be examined with the defitnion.
27 April 2009
There is no out and out exemption available to government department/offices for rendering any taxable services.
Vide the Master Circular No 97/2007, dated 23.08.2007, it has been clarified the following:
Q. Whether activities of a sovereign / public authority, performed under a statute, can be considered as ‘provision of service’ for the purpose of levy of service tax and the amount or fee collected, if any, for such purposes can be treated as consideration for the services provided?
Ans: Activities assigned to and performed by the sovereign / public authorities under the provisions of any law are statutory duties. The fee or amount collected as per the provisions of the relevant statute for performing such functions is in the nature of a compulsory levy and are deposited into the Government account.
Such activities are purely in public interest and are undertaken as mandatory and statutory functions. These are not to be treated as services provided for a consideration. Therefore, such activities assigned to and performed by a sovereign / public authority under the provisions of any law, do not constitute taxable services. Any amount / fee collected in such cases are not to be treated as consideration for the purpose of levy of service tax.
However, if a sovereign / public authority provides a service, which is not in the nature of statutory activity and the same is undertaken for a consideration (not a statutory fee), then in such cases, service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service as defined.
In this regard you also refer to Circular No. 89 / 7 /2006- Service Tax 18th December, 2006
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