Service Tax - Governmental Authority - Redefined
AS per Sl. No.12 of Notification No. 25/2012-Service Tax dated 20.06.2012, there is exemption for - Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - civil structure, canal, dam etc….
As per Sl. No. 25, there is exemption for - Services provided to the Government, a local authority or a governmental authority by way of - water supply, public health, repair of aircraft etc……
As per Sl. No. 34, there is exemption for - Services received from a provider of service located in a non- taxable territory by - (a) Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession;
As per Sl. No. 39, there is exemption for - 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.
Now the question is what or who is a/the governmental authority?
As per Para 2, Clause (s) of Notification No. 25/2012-Service Tax dated 20.06.2012, ‘governmental authority' is defined as:
"governmental authority'' means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution."
Now this definition is changed to:
"governmental authority" means an authority or a board or any other body;
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by Government,
with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution.
The purpose of this amendment seems to be to clarify the definition in better language. As per the earlier definition, the governmental authority had to be set up by an Act of Parliament or State Legislature and there was a doubt as to whether by Government in the earlier definition was in relation to ‘establishment' or ‘control'.
The Board should be kind enough to come out with a Circular explaining the purpose of this substitution lest the field formations have a field day!
Writing complex sentences is no more the forte of our law drafters as in the days of yore - now they should adapt the bulleted style for expressing whatever they want to convey.
Notification No. , Dated: January 30, 2014