By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Certification done under the Seeds Act, 1966 is not a mandatory and statutory function and therefore, chargeable to service tax.
Facts:
The appellant was an autonomous body registered under the Societies Registration Act, 1860, engaged in activities of technical inspection and certification of seeds produced by seed producers in Maharashtra State as per Seeds Act, 1966 and Seeds Rules, 1968. They charged fees for the said certification as prescribed under the said rules. Service tax applicability was challenged on the ground that they were doing certification work as envisaged under the Seeds Act, 1966 and the rules made thereunder which was a statutory function and therefore, no tax was leviable.
Held:
The Seeds Act, 1966 provides for regulating the quality of certain varieties of notified seeds for sale. Further, certification is required only if somebody intends to sell specified varieties of seeds through the intermediaries or in the market.
The appellant was a society registered under Societies Registration Act. The activities cannot be considered as mandatory and statutory function provided by a sovereign/ public authority and thus are chargeable to service tax under the Technical Inspection and Certification Services.
The demand within the normal period of limitation was only upheld and beyond the same was set aside. The penalties were also set aside.
