Support Services

[Gopalarathnam Muralidharan]

state  cooperative milk federation are being audited by Government Cooperative audit wing.  Milk federations are remitting audit fees to Government.   Whether these payment of audit fees to Govt will amount to Support services and if so liable to pay tax under Reverse charge Mechanisam

G Muralidharan

AI Summary

Audit Fees for Statutory Obligations Exempt from Service Tax Under Reverse Charge Mechanism; Not Support Services A state cooperative milk federation questioned whether audit fees paid to a government audit wing are considered support services and thus subject to service tax under the reverse charge mechanism. The response clarified that services provided by the government are generally exempt from service tax unless they are support services to business entities. Support services include operational and administrative functions outsourced by entities. However, services related to sovereign functions or statutory obligations are not considered support services. Therefore, if the audit is a statutory obligation, it is not subject to service tax under the reverse charge mechanism.