applicability of service tax on manpower outsourcing to municipal corporation

[Guest]

Dear Sir,

We are engaging or labour through man power outsourcing agency for our Municipal Corporation which is a Local Authority for the maintenance of sanitation,street lights,parks,water supply,security personnel and computer operators etc.

In this connection I would like to know whether these services are exempted from the levy of service tax under the Act.

yours sincerely

Chakravarthy s.n.

[Rajagopalan Ranganathan]

Sir,

As per Sl. No.12 of mega exemption notification No. 25/2012-ST dated 20.6.2012 (w.e.f. 1.7.2012) the following Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -

(a) ³⁸[omitted]

(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(c) ³⁸[omitted]

(d) canal, dam or other irrigation works;

(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or

(f) ³⁸[omitted]

alone are exempted. In your query services related to sanitation and water supply alone are exempted. Other services are liable to service tax subject to exemption limit of 10 lakhs.

[bhart b sharma]

definitely service tax is payable as service is being provided by a "person". Moreover, the service recipient is not perfoming any "SOVEREIGN" function...

[KASTURI SETHI]

Definition of 'GOVERNMENT' has been changed w.e.f. 14.5.2015 as per Section 3(26A) of the Finance Act,1994.Banks / financial constitutions, Housing Boards, Central or State Public Sector Undertakings (PSUs), Autonomous bodies, State Financial Corporations, Development authorities, Institutes such as ICAI, ICSI, ICWAI are out of definition of Government. This fact has to be kept in mind while examining leviability of ST and exemption from ST. Whether Municipal Corporation falls under the definition of 'Development Authority' ? If so, MC is also out of 'GOVT' as per Section 3(26A) of the Finance Act..

AI Summary

Service tax exemption limited to water and sewerage related maintenance; other outsourced municipal manpower remains taxable. Service tax on manpower outsourcing to a municipal corporation hinges on service type and entity status: exemptions apply only to construction/maintenance-related services for specified works including water supply and sewerage; sanitation and water-supply related manpower may be exempt, while other outsourced functions like security, computer operators, street-light and park services remain taxable. The narrowed statutory definition of 'Government' affects whether a municipal corporation qualifies for such exemptions and must be examined.