Service is exempted or not ?

Originally posted by : venu gopal
	We are providing works contract service to Andhra pradesh state irrigation corporation limited (APSIDC). APSIDC is setup by Government of andhra pradesh and Government of India. Equity is fully subscribed by the Government,. It works under Department of Irrigation to provide water supply to farmers. APSIDC works on irrigation projects which is fully financed and sanction by the Government. APSIDC is sole agency to government. we are providing  In the Notification No.  25/2012-Service Tax ( Mega exemption notification) " 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 " (d)  canal, dam or other irrigation works. are exempted APSIDC Is registered under Companies act 1956. but whole organisation works under directions of goverment of Andhra pradesh. Board of Directors and Managing Director is appointed by Government. it is only charges 15% on works executed for its establishment maintenance. Rest of every thing under control of government i.e sanction of project, financing to project. but all contract works in the name APSIDC and after maintenance of 2 years it is transferd to farmers committes for maintenance, no commericial aspect in project.  This works contract service is it liable to service tax ?. or Exempted ?

Dear Mr.Venu Gopal,

APSIDC is neither a Government, Governamnetal authority nor Local authority. Hence it is taxable.

I Support Mr.CA.Kishore Babu.

Government . The phrase ‘Government’ has not been defined in the Act. As per clause (23) of section 3 ofthe General Clauses Act, 1897 ‘Government’ includes both Central Government and any StateAs per clause (8) of section 3 of the said Act ‘Central Government’, in relation to anything done or to be done after the commencement of the Constitution, mean the President. As per article 53 of the Constitution the executive power of the Union shall be vested in the President and shall be exercised by him either directly or indirectly through officers subordinate to him in accordance with the Constitution. Further, in terms of article 77 of the Constitution all executive actions of the Government of India shall be expressed to be taken in the name of the President. Therefore, the Central Government means the President and the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of the President. Similarly as per clause (60) of section 3 of the General Clauses Act,1897 ‘State Government’, as respects anything done after the commencement of the Constitution, shall be in a State the Governor, and in Union Territory the Central Government. Further as per article 154 of the Constitution the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or indirectly through officers subordinate to him in accordance with the Constitution. Further, as per article 166 of the Constitution all executive actions of the Government of State shall be expressed to be taken in the name of Governor. Therefore, State Government means the Governor or the officers subordinate to him who exercise the executive power of the State vested in the Governor and in the name of the Governor.

As per the above definition of Government, In my opinion the APSIDC is not a government, because it is not working under the powers of neither President nor Governor.

Local Authority:

Local authority is defined in clause (31) of section 65B and means the following:-
• A Panchayat as referred to in clause (d) of article 243 of the Constitution
• A Municipality as referred to in clause (e) of article 243P of the Constitution
• A Municipal Committee and a District Board, legally entitled to, or entrusted by the
Government with, the control or management of a municipal or local fund
• A Cantonment Board as defined in section 3 of the Cantonments Act, 2006
• A regional council or a district council constituted under the Sixth Schedule to the
Constitution
• A development board constituted under article 371 of the Constitution, or
• A regional council constituted under article 371A of the Constitution.

As per the above definition of Local Authority, in my opinion the APSIDC is not covered under Local authority.

Governamental Authority: “governmental authority’’ means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government or set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution;

As per the above definition, "the APSIDC is not formed to carry out the functions entrusted to a municipality under article 234W of the constitution" Hence it is not a Governamental Authority.

Conclusion: As per the above definitions,The APSIDC is neither Government, Local Authority nor a Governamental Authority, hence Services provided to APSIDC is taxable.