In a U-turn, the Central Excise has reversed its stand on levying service tax on the Comptroller and Auditor General (CAG) saying it does not come under the business support service ambit.

The new circular issued by the Tax Research Unit (TRU) of CBEC said, CAG would not be
 
covered by the service head business support service. The new circular comes just 22 days after the chief commissioner of service tax wrote to all the Commissioners of Central Excise and Service Tax saying, CAG was not discharging its service tax liability all over India against the services provided by them and had defaulted Rs. 33 lakh of tax.  Later, another circular was issued on June 6 stating, No action should be taken till further orders are to be received by the Board.

A doubt has been raised whether service tax is leviable on the audit fees collected by the CAG for conducting directly audit of corporations.

Reportedly some field formations are inclined to take a view that such, audit fee collected by the CAG is leviable to service tax under the authority of the inclusive portion of the definition of practicing chartered accountant..., read the recent circular.

The circular added that services of CAG are not as rendered by a chartered accountant, even though both may be engaged in auditing. The scope of work of the CAG goes far beyond that of a statutory company auditor and is often carried out by persons who may not be a professional chartered accountant, it states.