Municipal facility charges treated as a municipal function, making the related service exempt from service tax.

Charging for use of municipal facilities was treated as a statutory municipal function performed under Section 422(f) of the Uttar Pradesh Municipal Corporation Act, 1959 and linked to Article 243W and the Twelfth Schedule, which includes regulation of slaughter houses and tanneries. On that basis, the activity was regarded as a service rendered by a governmental authority in relation to a function entrusted to a municipality, bringing it within Notification No. 25/2012-Service Tax dated 20.06.2012. The activity was therefore treated as exempt from service tax, and the Revenue's challenge failed.

---

---

Issues: Whether the respondent's activity of charging for use of municipal facilities was a statutory function under municipal law and, if so, whether it was exempt from service tax under the relevant exemption notification.

Analysis: The activity was found to be undertaken in discharge of powers under Section 422(f) of the Uttar Pradesh Municipal Corporation Act, 1959. It was also linked to Article 243W of the Constitution of India and the Twelfth Schedule, which includes regulation of slaughter houses and tanneries among municipal functions. On that basis, the activity was treated as a service rendered by a governmental authority in relation to a function entrusted to a municipality, bringing it within the exemption under Notification No. 25/2012-Service Tax dated 20.06.2012.

Conclusion: The activity was held to be exempt from service tax and the Revenue's challenge was rejected.

---