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

Taxability of tree plantation services: horticulture treated as taxable service; service provider liable, reverse charge inapplicable. Tree plantation by a government authority to a business entity constitutes a taxable service categorized as horticulture, which falls outside the legal definition of agriculture and is not listed among exempted services or the Negative List; consequently it is subject to service tax. The specific reverse charge notification for services by government or local authorities does not cover this horticulture service, so reverse charge is inapplicable and the service provider must pay the service tax.