Industry and business chambers are liable to pay service tax. The Central Board of Excise and Customs on Thursday clarified that the trade associations falls within the scope for clubs and association services.
The clarification comes close on the heels of Confederation of Indian Industries (CII) getting a show cause notice from the service tax department for Rs 32 71 crore.
The board said that the services provided by these associations are not of charitable, religious or political in nature. They collect membership fees and other charges from their members and they work for the interest of trade and industries. Therefore, they do not have objectives which could be categorized as public service. Accordingly, they do not fall within the scope of the excluded categories, it said.
Services provided by the trade associations to their own members are not in the nature of self service by virtue of the Explanation under Section 65 of the Finance Act, 1994 which clearly states that the taxable services include any service provided by any unincorporated association or body of person to a member thereof, for cash deferred payment or any other valuable consideration.