Charging of Service Tax on Audit of Sarba Siksha Abhijan Scheme

[Asish Chattopadhyay]

Dear Sir/ Madam

Undersigned is associated with Financial Audit activities of expenses under Sarba Siksha Abhijan Schemee of W.B. Government. This project functions under the umbrella of Sarba Siksha Mission of the Govt. of India. Appointment as Auditor has been done by State Project Director, Paschim Banga Sarba Siksha mission under W.B. Govt. dealing with Sarba Siksha Abhijan activities. Whether Service Tax is payable on above Audit Fees. If not then under what Act / Departmental Notification reference. Please enlighten.

Regards

A.K.Chattopadhyay

[Rajagopalan Ranganathan]

Sir,

Prior to 30.1.204, "Governmental authority" means an authority or board or any other body- (i) set up by an Act of the Parliament or a State Legislature or established by Government- - with 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243 W of the Constitution (Definition clause 2 (s) of Notification No. 25/52012-ST dated 20.6.2012.

After 30.1.2014, a body can be 'governmental authority' set up by Government by resolution.

If you satisfy any one of these conditions for period prior to 31.1.2014 or after that date you need not pay service tax. Otherwise you have to pay the tax.

AI Summary

Governmental authority status determines exemption from service tax on audit fees for state Sarba Siksha audits. Applicability of service tax on audit fees hinges on whether the audited body qualifies as a governmental authority. Under earlier guidance an entity qualified only if constituted by statute or established by government with very high public participation and entrusted with municipal-type functions; under later guidance a body may qualify if set up by government resolution. Compliance with the applicable criterion for the relevant period determines exemption from service tax; failure to satisfy the criterion renders the audit services taxable.