TMI Blog2024 (5) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax Rules, 1994, service tax is payable by the service provider, it has to be held that if such services are provided by a Government or Local Authority, they are exempted under Section 65D(1)(a) of the Finance Act,1994 as amended and as in force from 01.07.2012. Only ancillary service provided by a third party towards renting of immoveable property of a non-governmental or local body will be liable to pay service tax like any other service provider. Therefore, service tax is payable by the service provider himself.' The writ petition is allowed. - Honourable Mr. Justice C. Saravanan For the Petitioner : Mr. P. Athimoolapandian For the R1 to R3 : Mr. N. Dilip Kumar Senior Standing Counsel Asst. by Mr. K. Prabhu Junior Standing Counsel. For the R4 R5 : Mr. C. Karthik ORDER The issue is covered in favour the petitioner in view of the order passed by this Court on 22.03.2021 in the case of The Cuddalore Municipality vs. The Joint Commissioner of GST and Central Excise in W.P. Nos. 8900 of 2018 etc. batch. The operative portion of the order is extracted hereunder: 45. The definition of Service as in Section 65B(44) of the Finance Act, 1944 is very wide. Thus, any activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Any service vide Finance Act, 2015 (20 of 2015), dated 14.05.2015. 49. In its publication dated 20.6.2012, titled the Taxation of Service, An Education Guide, the Central Board of Indirect Tax clarified as follows:- 2.4.5 Are Government and local authorities also liable to pay tax? Yes. However, most of the services provided by the Government or local authorities are in the negative list. 2.4.6 What is the rationale behind taxing certain activities of the Government or local authorities? Only those activities of Government or local authorities are taxed where similar or substitutable services are provided by private entities. The rationale is as follows- to provide a level playing field to private entities in these areas as exemption to Government in such activities would lead to competitive inequities; and to avoid break in Cenvat chain as the support services provided by Government are normally in the nature of intermediary services. 2.4.8 What is a local authority? Local authority is defined in clause (31) of section 65B and means the following :- A Panchayat as referred to in clause (d) of article 243 of the Constitution A Municipality as referred to in clause (e) of art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sident under article 53(1) of the Constitution and similarly to the Governor under article 154 (1). Such a statutory body, corporation or an authority as a juristic entity is separate from the state and cannot be regarded as Central or State Government and also do not fall in the definition of local authority. Thus regulatory bodies and other autonomous entities which attain their entity under an act would not comprise either government or local authority. 2.4.11 Would services provided by one department of the Government to another Department of the Government be taxable? If services are provided by one department of the Central Government to another department of the Central Government or by a department of a State Government to another department of the same State Government then such service would not be taxable as it would amount to self-service. To be taxable a service has to be provided to another person. On the other hand if a service is provided by a Central Government department to a State Government department or vice versa or a by a State to another State Government or by a Government to an autonomous body, the same would be taxable if such service does not fall in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment be charged to tax if they are otherwise exempt or specified elsewhere in the negative list? No. If the services provided by the government or local authorities that have been excluded from the negative list entry are otherwise specified in the negative list then such services would also not be taxable. 51. Only Support services provided by the government or local authorities that have been excluded from the negative list entry are in the negative list. Otherwise, all service of government and local authorities are not taxable. Support services was defined in Section 65B of the Act as ? infrastructural, operational, administrative, logistic marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of movable or immovable property, security, testing and analysis. 52. Services which are provided by government in terms of their sovereign right to business entities, and which are not substitutable in any manner by any private entity, are not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinal or toilets; 39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. 60. Thus, there is no jurisdiction in the impugned Show Cause Notices / Orders-in-Originals issued by the respondent. In the light of the above discussion, demand proposed in the impugned S.C.N.No.04/2018 (ST) in C.No.V/ST/15/2/2018-ST. Adjn. Dated 07.03.2018 and demand confirmed in Order-in-original No.3/2017-ST in C.No.IV/09/04/2017-ST. Adjn. (RO OC No.100/2016) dated 24.03.2017 and Order-in-Original No. 5/2018-ST in C.No.V/ST/15/21/2018-ST.Adj. dated 06.04.2018 are liable to be quashed and are accordingly quashed. 61. In the result, i. W.P.No.3969 of 2018 as mentioned above is dismissed as infructuous. ii. W.P.No.8900 of 2018, W.P.No.31799 of 2017 and W.P.No.12489 of 2007 are allowed. iii. No. Cost. Consequently, connected Miscellaneous Petitions are closed. 2. Although a contrary was taken by this Court on an earlier occasion on 09.09.2020 in W.P.(MD)No.3774 of 2018, the said view is not based on any reasoning. Hence, I do not wish to dilute on it. Suffice to state that the petitioner has made out a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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