Does Service provided to NHAI falls under the net.

[Rajesh Sharma]

Dear Sir,

 

I want to know whether service provided by an Advocate or association of advocates to NHAI falls under Service Tax net in the year 2011-12. As per the definition of the Act on Legal Consultancy, services provided to 'business entity' falls under the service tax net. Therefore, I want to know whether NHAI falls in the category of business entity.

 

Waiting for your quick reply.

[Surender Gupta]

To my mind, NHAI is not a business entity and not liable to service tax on reverse charge on Advocate Services.

[JAMES PG]

As per notification no. 25/2012, following conditions should be satisfied to be eligible for exemption as a Govt authority:

- Set up by an Act of the Parliament or a State Legislature

- Estabilished with 90% or more participation by Govt

- Carries out the functions entrusted to a municipality under Article 243 W of the Constitution.

NHAI is constituted by the Act of Parliament, viz, National Highway Authority of India Act, 1988. Being so, it is not a business entity. ( http://www.nhai.org/)

[Guest]

I agree with the view that NHAI is not a business entity.  At the same time, before this forum,  I wish to state the following. Whenever any service is rendered directly or indirectly to the Government, the Government has to pay the Tax through the service provider, in general. To pay the tax to the service provider and then collecting it from them appears to be an unnecessary exercise.  Therefore, in my opinion, all services rendered to Government could be exempted to avoid unnecessary paper work and any litigations in this regard could be avoided.    Hope my views will be  in the right direction. --- J.R.SRINIVASAN, RETD. SUPDT OF C.EX., / CONSULTANT.

[Surender Gupta]

I would like to endorse the views of Mr. SRINIVASAN RAJAGOPALAN.

An email  in this regard has also been sent to CBEC.

AI Summary

Government authority exemption excludes service tax on legal services provided to statutory authorities established by Act. Respondents conclude that NHAI is not a business entity and can qualify as a government authority exempt from service tax because it is constituted by an Act of Parliament. Eligibility for the government authority exemption is tied to conditions such as statutory establishment, predominant government participation, and performance of municipal-type functions. Commentators also observe that services to government are typically taxed via the provider and propose administrative exemptions to reduce paperwork and disputes, noting that the matter was raised with the tax administration.