Service tax on statutory functions was sent back for fresh scrutiny after the later precedent on sovereign authority activities.

Later precedent on service tax clarified that no tax is leviable on a mandatory statutory function performed by a sovereign or public authority when the fee collected is a compulsory levy deposited in the Government treasury, while tax may apply to non-statutory services rendered for consideration. The Court found that the Tribunal had not examined how that ruling affected the activities of a statutory development corporation under the governing statute, so the earlier Tribunal decision and review order were set aside and the matter was remitted for fresh adjudication on that limited question.

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Issues: Whether the Tribunal's order allowing the appeal on service tax liability of activities undertaken by a statutory development corporation required reconsideration in light of the later decision on levy of service tax on activities of sovereign or public authorities performed under law.

Analysis: The Court noted that the later decision explained that no service tax is leviable where the activity is a mandatory statutory function performed by a sovereign or public authority and the fee collected is a compulsory levy deposited in the Government treasury, while tax may be leviable where the activity is a non-statutory service rendered for consideration. The effect of that ruling on the activities carried out by the Gujarat Industrial Development Corporation under the Gujarat Industrial Development Act, 1962 had not been examined by the Tribunal. The earlier Tribunal decision and the review order were therefore set aside and the matter was sent back for fresh decision on that limited question.

Conclusion: The issue was left for fresh adjudication by the Tribunal on the effect of the later precedent on the Corporation's activities under the governing statute.

Final Conclusion: The dispute was not finally determined on merits and was remitted to the Tribunal for reconsideration within the limited scope indicated by the Court.

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