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NO Dated : November 10, 2006 Subject : Service Tax on Departments of Government of India - regarding Reference is invited to letter F.No. 354/59/2006-TRU dated 24.6.2006 regarding levy of service tax on taxable services provided by government departments. 2. In view of number of representations received from field formations seeking clarification on levy of service tax on services provided by government departments, pending examination of the issue, field formations were asked to keep in abeyance action in such cases. The matter has been examined. 3. Taxable services are defined individually under section 65(105) of the Finance Act, 1944. The definitions, apart from specifying the nature of the service, also indicate the status of the service provider. In this year's budget, in a number of services, the phrase "commercial concern" has been substituted by the phrase "any person". Wherever the service provider is mentioned as "any person", the term "person" ordinarily includes government unless, in the context, government is excluded by applying the rules of statutory interpretation. 4. To levy service tax, the following criteria are to be satisfied. The service provided or to be provided satisfied the definition of taxable service. There should be receipt of consideration for the taxable service provided. 5. In view of the above, field formations may be asked to examine individual cases carefully taking into account all the material facts and take a view. In case of any doubt in individual cases having all India implication, and in any case where it is proposed to levy service tax on a service provided by a department of the central government of state government, the same may be referred to the Board.
(R. Sriram)
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