CAMPA fund payments for forest diversion are not declared services, so service tax cannot apply.

A compulsory payment into the CAMPA fund made under statutory forest-clearance requirements for diversion of forest land does not constitute a declared service under section 66E(e) of the Finance Act, 1994. The payment was collected by operation of law to compensate for ecological loss and meet conservation obligations, not under any consensual arrangement to tolerate an act or situation, so the essential element of consideration for service tax was absent. Service tax could not therefore be levied on such compensatory statutory payments, and the demand, interest and penalty were unsustainable.

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Issues: Whether the payment made into the CAMPA fund in connection with diversion of forest land for non-forest purposes constituted a declared service under section 66E(e) of the Finance Act, 1994 so as to attract service tax.

Analysis: The payment was made pursuant to statutory and regulatory requirements linked to forest diversion clearance and not under any agreement for tolerating an act or situation. The amount was collected by operation of law to compensate for ecological loss and to meet conservation obligations, and therefore lacked the essential element of consideration for a service. A levy on such compulsory compensatory payments could not be sustained as taxation on a declared service involving tolerance of an act.

Conclusion: The payment into the CAMPA fund was not a declared service under section 66E(e) of the Finance Act, 1994, and no service tax was payable on it. The demand, interest, and penalty were unsustainable and the appeal succeeded in favour of the assessee.

Ratio Decidendi: A compulsory payment made under statute for diversion of forest land, without any consensual arrangement to tolerate an act or situation, does not constitute consideration for a declared service under section 66E(e) of the Finance Act, 1994.

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