Whether ST applicable on Tree Plantation service by Govt.Authority to Business Entity??

[hardik thacker]

Sir,

My organisation had entered into agreement with one of the Govt. organisation (I.E GUJARAT ECOLOGICAL COMISSION) for 'PLANTATION FOR TREES in certain hectares of area for getting 'ENVIRONMENT CLEARANCE'

Whether above activity is 'SERVICE'??

Whether amount paid to Gujarat Ecological Commission is liable for Service Tax under Reverse Charge mechanism ??

[Rajagopalan Ranganathan]

Sir,

Please refer to Sl. No. 6 of Notification No. 30/2012-ST dated 20.6.2012 (with effect from 1.7.2012) wherein it is stated that in respect of services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994 100% service tax is payable by the service receiver.

Sub-clauses (i) (ii) and (iii) of clause (a) of Section 66D of Finance Act 1994 are: -

(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.

[hardik thacker]

Exactly Sir,

But, Whether the activity as described can considered as "Agriculture Activity" and hence exempt from paying Service Tax ????

[Ganeshan Kalyani]

In simple sense an activity you yourself carried in farm for cultivation would be considered as agricultural activity. From Mr.Rajagopalan sir reply it becomes clear that such service is taxable.

[KASTURI SETHI]

Yes. Tree plantation activity is a service. It falls under the definition of horticulture. Though horticulture is a branch of agriculture but no exemption is available to horticulture. "Horticulture" is neither mentioned in Negative List specified under Section 66 D (i to vii) of the Finance Act, 1994 nor in the list of Exempted Services in Mega Exemption Notification No.25/12-ST dated 20.6.2012. Moreover, Horticulture is out of definition of "Agriculture' defined under Section 65 B (3) of the Finance Act. No benefit of Reverse Charge Mechanism is available inasmuch as this service does not find place in Notification No.30/12-ST dated 20.6.2012. Hence Service Tax has to be paid in full by the Service Provider.

AI Summary

Tree Plantation by Business Entity Deemed Taxable Service, Not Exempt as Agricultural Activity Under Reverse Charge Mechanism A business entity entered into an agreement with a government authority for tree plantation to obtain environmental clearance, raising questions about service tax liability. The discussion centered on whether this activity qualifies as a service and if it is subject to service tax under the Reverse Charge Mechanism. It was concluded that tree plantation is considered a service, falling under horticulture, which is not exempt from service tax. It does not qualify as an agricultural activity, thus not eligible for exemption or benefits under the Reverse Charge Mechanism, requiring the service provider to pay the full service tax.