Service provided by MIDC

[ANIL MANTRI]

MIDC provides effluent treatment service to the industries in particular MIDC to clean the polluted water of their factory before disposing off in water bodies. For this they charge amount on the basis of number of liter water treated. Will this service come under reverse charge as service provided by government or local authority and the companies need to pay service tax on it ? Companies are legally not allowed to dispose off water with-out treating them either by themself or through CETP maintained by MIDC.

[PAWAN KUMAR]

As per my view, Companies need to pay service tax at the rate of 100 percent on the amount to be paid to MIDC as per S.No.6 of Notification No.30/2012-ST dated 20.06.2012.

AI Summary

Reverse charge applies to effluent treatment services, obliging recipient companies to discharge service tax liability. Recipient companies using a corporation-operated Common Effluent Treatment Plant to treat industrial effluent are liable to pay service tax under the reverse charge mechanism on amounts charged by the corporation for treatment, because industries are legally required to treat effluent and the service is supplied by the corporation through the CETP.