Circular No. 84 /2/2006-ST dated 19.09.2006

Circular No. 84 /2/2006-ST

F. No.137/123/2006-CX-4

Ministry of Finance

Department of Revenue

(Central Board of Excise & Customs)

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 19^th September, 2006

Sub:    Scope of term “charitable” used in the definition of club or association service – reg.

The issue is whether any club or association that enjoys exemption under the provisions of Income Tax Act on the ground of being a public charitable institution gets automatically excluded from levy of service tax under section 65(105)(zzze) read with section 65(25a) of the Finance Act, 1994.

2.         Exemption under the Income Tax Act on the ground of being a public charitable institution is of no consequence to levy of service tax.  Levy of service tax is entirely governed by the provisions contained in the Finance Act, 1994 and the rules made thereunder.

3.         The definition of “charity” and “charitable” as defined in Black’s Law Dictionary may be kept in mind.  “Charity” is defined as “aid given to the poor, the suffering or the general community for religious, educational, economic, public safety, or medical purposes”, and “charitable” as “dedicated to a general public purpose, usually for the benefit of needy people who cannot pay for the benefits received”.

4.         The officer concerned should examine the matter on a case-by-case basis, and the decision should be made after taking into account all material facts and statutory provisions.

5.         Trade and field formations may be advised accordingly.