The Excise and Service Tax Department which was contemplating to impose service tax on the office of Comptroller and Auditor General (CAG) is having second thoughts about its proposal and has asked its officials to go slow in the matter, sources said today.

"The subject matter is being examined by the board office. Therefore, it is requested that no action is required to be taken till issuance of further clarification by the board in this regard", said a circular issued by the department.

Earlier, the department had taken a stand that the Comptroller and Auditor General(CAG)which audits accounts of government companies was liable to pay service tax as it charges fees for its 'service'.

The department in a letter to its officials on May 30 had cited an instance where CAG was paid for its services but it did not pay service tax thereon.

"Preliminary enquiry reveals that they (CAG office in Nagpur) have received Rs 3.3 crore from three organisations in the last five years for providing services, but have failed to pay Rs 33 lakh as service tax on such taxable services provided by them".

The reason for the department deciding against imposing service tax on CAG for now was not immediately known.

"The issue was taken up at the conference held in New Delhi and attended by all the Chief Commissioners", said a source.