The Hindu 14.01.2011
Even post offices must pay service tax, BBMP tells court
The Bruhat Bangalore Mahanagara Palike (BBMP) on Thursday submitted to
the Karnataka High Court that Central Government establishments,
institutions, undertaking and offices were exempt from paying only
property tax and not service tax.
The BBMP said it was not charging or levying property
tax on any Central Government undertaking or office. “However, we are
levying and collecting service tax on the services we render,” the BBMP
said.
The BBMP made these submissions when a Division Bench
comprising Justice V.G. Sabhahit and Justice B. Manohar was hearing an
appeal by the civic body against a single judge order of September 2010.
The judge had set aside the BBMP action in levying service tax on the
Department of Posts, Mahalakshmipuram, Bangalore.
The single judge had held that post office, as per the
definition of the Bangalore Development Authority (BDA) Act, 1976, was a
civic amenity and that no tax or charge may be imposed on it by the
State Government or its agencies.
The BBMP, in its appeal, said it had issued a notice on
April 12, 2005 to the Department of Posts, asking it to pay 25 per cent
of the property tax as service charge. The Department of Posts, it said,
had challenged the notification saying the service charge was nothing
but tax and that all Central installations were exempt from paying it.
The BBMP argued saying that it was not levying tax but
charging for services it rendered such as supplying water, providing
roads and drains and removing debris and garbage.
It said even the Karnataka Municipal Act had been
amended providing for charging of service tax. It urged the Bench to
quash the single judge order.
The Bench admitted the appeal and adjourned further hearing of the case.
