Service Tax on Fee Collected by Public Authorities

Applicability of service tax on fee collected by
Public Authorities
• Vide circular No. 89/7/2006- ST dated 18.12.2006 it is
clarified that the activities performed by the
sovereign/public authorities under the provision of
law are in the nature of statutory obligations which are
to be fulfilled in accordance with law.
• The fee collected by them for performing such
activities is in the nature of compulsory levy as per the
provisions of the relevant statute, and it is deposited
into the Government treasury.
• Such activity is purely in public interest and is
undertaken as mandatory and statutory function.
These are not in the nature of service to any particular
individual for any consideration.
• Therefore, such an activity performed by a
sovereign/public authority under the provisions of law
does not constitute provision of taxable service to
person and, therefore, no service tax is leviable on
such activities.
• However, if such authority performs a service, which is
not in the nature of statutory activity and the same is
undertaken for a consideration not in the nature of
statutory fee/ levy, then in such cases, service tax
would be leviable, if the activity undertaken falls
within the ambit of a taxable service. For e.g. fitness
certificate to the vehicles issued by RTO or Certificate
for boiler issued by Directorate of Boilers etc. are
mandatory as per law and the sum is deposited into
government treasury, so service tax will not be
leviable on this activities.
• Vide circular No. 89/7/2006- ST dated 18.12.2006 it is
clarified that the activities performed by the
sovereign/public authorities under the provision of
law are in the nature of statutory obligations which are
to be fulfilled in accordance with law.
• The fee collected by them for performing such
activities is in the nature of compulsory levy as per the
provisions of the relevant statute, and it is deposited
into the Government treasury.
• Such activity is purely in public interest and is
undertaken as mandatory and statutory function.
These are not in the nature of service to any particular
individual for any consideration.
• Therefore, such an activity performed by a
sovereign/public authority under the provisions of law
does not constitute provision of taxable service to
person and, therefore, no service tax is leviable on
such activities.
• However, if such authority performs a service, which is
not in the nature of statutory activity and the same is
undertaken for a consideration not in the nature of
statutory fee/ levy, then in such cases, service tax
would be leviable, if the activity undertaken falls
within the ambit of a taxable service. For e.g. fitness
certificate to the vehicles issued by RTO or Certificate
for boiler issued by Directorate of Boilers etc. are
mandatory as per law and the sum is deposited into
government treasury, so service tax will not be
leviable on this activities.