Service tax to ngo

There is an NGO (legal status - a co-operative society) which has its members engaged in collecting waste and garbage from various housing societies which ultimately gets dumped to central place of municipal corporation where all the garbage of the city gets accumulated. The NGO charges monthly invoices to all housing societies, retains a small portion for its administrative expenses and pays the balance amount to waste picker members. The members are only members and not employees of the NGO. Total invoicing of the NGO to houcing societies exceeds Rs. 10 lacs. Will the NGO be liable for Service Tax on collection of waste and garbage?

Replies (3)

From the descripttion provided above, your activity shall fall into the meaning assigned to the term "Solid Waste Management". One specific exemption has been provided to such activity wherein the following may be noted -

"Services provided to Government, a local authority or a governmental authority by way of

(a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or

(b) repair or maintenance of a vessel or an aircraft"

 

Meaning if you are engaged by the Local Authority of your ward, then the same shall be considered to be exempt from Service Tax.

If not, then I am afraid to tell you that the said activity would be liable to Service Tax.

Thanks Vikas. Yes, these services are vide an agreement between the NGO and the local authority. Just also want to confirm that this exemption is vide a certain notification (if I remember it correctly, a notification in June 2012). Does it mean that if the notification is withdrawn, this service will become taxable and the NGO will have to pay service tax? Also, whether before 2012-13 when there was no negative list concept, was this service covered under list of taxable services (since the NGO is facing this issue for several years)?

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