Business Auxiliary Service

[RAVI SONI]

M/S ABC and Co. a Partnership Firm is registered in Service Tax department under “ Business Auxiliary Services ” and it is engaged in providing services to the following government education board

West Bengal Secondary Education Board

West Bengal Higher Secondary Education Board

Tripura Board of Secondary Education

Board of Secondary Education, Odhisa

West Bengal Board of Madrasah Education.

All the above education boards are under state government and services provided by M/S ABC and Co. are with respect to admission, examination and result procedure alongwith printing of admit cards and marksheet.

In this case I want to know whether M/S ABC and Co. should charge service tax on these education boards and if it is not liable to charge Service Tax then on what basis.

All the above boards are reluctant to pay Service Tax as the board officials says that they are working for secondary and higher secondary education boards and are state government organization.

[Rajagopalan Ranganathan]

Sir,

If the Boards mentioned in your query are set up by an Act of Legislature of the respective State , then they are governmental authority. Services provided by Government or local authority is included in Clause (a) of Section 66 D of Finance Act, 1944 (Negative List) which states that-

(a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere-

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;

(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iii) transport of goods or passengers; or

(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities;

. Therefore they are not liable to pay service tax. However in your case the service is provided by a partnership firm. Hence the partnership firm is liable to pay service tax which is to be reimbursed by the respective Boards. In your case service is provided to governmental authority and the service is not provided by the governmental authority.

AI Summary

Services to governmental authorities: supplier must pay service tax where the supplier, not the authority, provides the service. Statutory education boards are governmental authorities and services provided by a government or local authority are excluded under the negative list; however, where a private partnership firm supplies business auxiliary services to those boards, the firm is liable to pay service tax, since the exemption covers services by the authority itself and does not apply to third-party suppliers, while the boards may reimburse the firm.