2008 (3) TMI 290 - HC - Service Tax

Petitioner, Co-operative Society is engaged in the activity of ensuring a safe and cleaner environment by undertaking treatment of industrial effluents and industrial waste materials with the aid of the Central and State Government - this activity for ensuring protection of the environment is certainly an activity in public interest - Central Government should duly consider the request of petitioner for exemption from service tax - interim stay against recovery of any service tax is granted

Summary

Issues:
1. Whether the petitioner Society is exempt from service tax under Section 65(25a) of the Finance Act, 1994.
2. Whether the Central Government has the power to grant exemption from service tax.
3. Whether the activities of the petitioner Society fall under public service and are in the interest of environmental protection.
4. Whether the petitioner Society is eligible for exemption from service tax based on its objectives and operations.

Analysis:

Issue 1: The petitioner Society's exemption from service tax under Section 65(25a) of the Finance Act, 1994 was discussed. The Society, being a Co-operative Society, argued that its activities were based on the principle of mutuality and aimed at providing treatment of effluents and managing waste generated by its industrial unit members. The Court acknowledged that the Society's objectives included public service in preventing and controlling pollution, falling under the exemption clause.

Issue 2: The Court examined the power of the Central Government to grant exemptions from service tax as per Section 93 of the Finance Act, 1994. The provision allowed for exemptions in the public interest, either generally or in specific cases with exceptional circumstances. The Court highlighted this provision in considering the petitioner Society's eligibility for exemption.

Issue 3: The activities of the petitioner Society in establishing Common Effluent Treatment Plants for industrial units were reviewed. The Society was formed with the joint initiative of the State and Central Governments, focusing on environmental protection and pollution control. The Court emphasized the importance of such activities in ensuring a safe and cleaner environment, aligning with the constitutional duty of sustainable development.

Issue 4: The Court assessed the petitioner Society's objectives and operations in detail. It noted that the Society aimed to eliminate pollution by treating industrial effluents and solid waste, without a profit motive. The Society's surpluses were reinvested for environmental purposes, indicating a commitment to effective pollution control. The Court concluded that the Society's activities were in the public interest and aligned with sustainable development goals.

In the final decision, the Court directed the petitioner Society to make a representation to the Central Government for exemption from service tax, considering the observations made in the judgment. An interim stay against the recovery of service tax was granted until the Central Government's decision was placed on record within two months.