Service Tax on Fumigation of Export Cargo - CBEC Clarifies
BOARD was asked a clarification whether the activity of fumigation of export cargo including agricultural/horticultural produce, whether loaded into containers or otherwise, is a taxable service falling under ‘cleaning services' or not.
Board has examined the issue and observes that,
Fumigation, per se, is a cleaning activity. However, the definition under section 65(24b) of the Finance Act, 1994, as amended, taxes cleaning of ‘objects or premises' of (i) commercial or industrial buildings and premises thereof; or (ii) factory, plant or machinery, tank or reservoir of such commercial or industrial building and premises thereof.
And clarifies that,
Fumigation of export cargo including agricultural/horticultural produce, whether loaded into containers or otherwise, does not satisfy the statutory definition of ‘cleaning activity' under Section 65(24b) of the Finance Act, 1994.
And explains that,
As a matter of abundant precaution, Government had also issued Notification No. 41/2007-ST dated 6.10.2007, as amended by Notification No. 42/ 2007-ST dated 29.11.2007 to exempt specialised cleaning services of containers used for export goods. This was in line with the international practice of making the export consignments free from taxation in the country of its origin.
And cautions that,
the wordings of this circular cannot be used to interpret the scope of service defined under Section 65 (105) (zzzd) of the Finance Act, 1994.
But isn't the Board aware that Notification No. 41/2007 as amended by Notification No. 42/2007 had been superseded by Notification No. 17/2009 dated 7.7.2009? Any way this Notification No. 17/2009 also continues with the exemption for fumigating of containers.
CBEC Circular No. 132/1//2011-ST., Dated: January 12, 2011