FICCI and CII want exemption from Service Tax
and 868 had carried news that CBEC had clarified that Trade Associations are liable to pay Service Tax.
Now FICCI and CII have approached the Government for exemption. FICCI Secretary General is reported to have spoken to the Finance Minister on the subject.
It seems the CII is also in touch with the FM. It is heard that CII is already stuck with a SCN for over Rs. 30 Crores and details are sought from FICCI.
FICCI and CII feel that they are non-profit organisations and are not liable to tax. FICCI claims that it had worked for national independence and there was no money made in that enterprise.
But the Board clarification is emphatic when it states,
The services provided by these associations are not of charitable, religious or political in nature. They collect membership fees and other charges form their members and they work for the interest of trade and industries. Therefore, they do not have objectives which could be categorized as public service. Accordingly, they do not fall within the scope of the excluded categories.
Further some of the trade associations have also argued that they are providing service to their own members and thus the service is self service. However such argument does not have any legal basis. In this regard attention is invited to the Explanation to section 65 of the Finance Act, 1994, which clearly clarifies that taxable services includes any service provided by any unincorporated association or body of person to a member thereof, for cash deferred payment or any other valuable consideration.