Services provided by Government or a local authority by way of registration, testing and certification etc. as required under any law - Service Tax Practice Manual / Ready Reckoner - Service Tax

Chapter 58 Services provided by Government or a local authority by way of registration, testing and certification etc. as required under any law (W.e.f - 13 th April 2016) Scope of Exempt Service - Notification no. 25/2012 dated 20.06.2012 From 13.4.2016 - Notification No. 22/2016 - Dated 13-4-2016 58. Services provided by Government or a local authority by way of- (a) registration required under any law for the time being in force; (b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force Meanings and Definitions: (s) 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 ] 65B (26A) Government means the Departments of the Central Government, a State Government and its Departments and a Union territory and its Departments, but shall not include any entity, whether created by a statute or otherwise, the accounts of which are not required to be kept in accordance with article 150 of the Constitution or the rules made thereunder. 65B (31) local authority means- (a) a Panchayat as referred to in clause (d) of article 243 of the Constitution ; (b) a Municipality as referred to in clause (e) of article 243P of the Constitution ; (c) a Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (41 of 2006.) (e) a regional council or a district council constituted under the Sixth Schedule to the Constitution ; (f) a development board constituted under article 371 of the Constitution ; or (g) a regional council constituted under article 371A of the Constitution ; CIRCULAR NO. 192/02/2016-Service Tax It is clarified that any activity undertaken by Government or a local authority against a consideration constitutes a service and the amount charged for performing such activities is liable to Service Tax. It is immaterial whether such activities are undertaken as a statutory or mandatory requirement under the law and irrespective of whether the amount charged for such service is laid down in a statute or not. As long as the payment is made (or fee charged) for getting a service in return (i.e., as a quid pro quo for the service received), it has to be regarded as a consideration for that service and taxable irrespective of by what name such payment is called. It is also clarified that Service Tax is leviable on any payment, in lieu of any permission or license granted by the Government or a local authority. 2. However, services provided by the Government or a local authority by way of: (i) registration required under the law; (ii) testing, , calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under the law, have been exempted vide Notification No. 25/2012 - -ST dated 20.6.2012 as amended by Notification No. 22/2016 -ST dated 13.4.2016 [Entry 58 refers]. 3. Further, services provided by Government or a local authority where the gross amount charged for such service does not exceed ₹ 5000/-have been exempted vide Notification No. 25/2012 -ST dated 20.6.2012 as amended by Notification No. 22/2016 -ST dated 13.4.2016 [Entry 56 refers]. However, the said exemption does not cover services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994. Further, in case of continuous service, the exemption shall be applicable where the gross amount charged for such service does not exceed ₹ 5000/-in a financial year. 4. It is also clarified that Circular No. 89/7/2006-Service Tax dated 18-12-2006 and Reference Code 999.01/23.8.07 in Circular No. 96/7/2007-ST dated 23.8.2007 issued in the pre-negative list regime are no longer applicable.