d08c4f03_nternational_in_bound___Page_3__Comment
[Reference Code] 999.01 / 01.07.07 [Issue] Sovereign/public authorities perform functions assigned to them under the law in force, known as "statutory functions". For example, · Regional Reference Standards Laboratories (RRSL) undertake verification, approval and calibration of weighing and measuring instruments; · Regional Transport Officers (RTO) issue fitness certificate to motor vehicles; · Directorate of Boilers inspects and issues certificates for boilers; or · Explosive Department inspects and issues certificate for petroleum storage tank, LPG/CNG tank in terms of provisions of the relevant laws. Authorities providing such functions, required to be performed as per law, may collect specific amount or fee and the amount so collected is deposited into government account. Whether such 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? [Comment] 
Activities assigned to and performed by the sovereign / public authorities under the provisions of law, are statutory. 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 a public interest and are undertaken as a mandatory and statutory function. 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 law, does not constitute provision of taxable service. Any amount / fee collected in such cases are not to be treated as consideration for the purpose of service tax levy. 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.
014 - Service Tax - Circulars - Year 2007 - Circular No.- 90 /1/2007, dated - 03-01-2007 - Applicability of service tax on international in-bound - Page 3
Comment