Town Panchayat Service Tax Case Remanded: CESTAT Orders Fresh Review of Municipal Services' Sovereign Function Status.

CESTAT remanded a service tax dispute concerning a Town Panchayat's renting of immovable property. The case centered on whether municipal services qualified for tax exemption under sovereign functions. Following precedents from Madras HC in Cuddalore Municipality and St. Thomas Mount cases, the Tribunal determined that a detailed examination was necessary to establish if the services constituted sovereign functions. The matter was remanded to the Adjudicating Authority for fresh consideration, specifically to analyze the nature of services provided and their classification under sovereign functions. The extended period of limitation and local authority status were key elements requiring reassessment. .....

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