United Nations has six Principal Organs i.e. General Assembly, Security Council, Economic & Social Council, Secretariat, International Court of Justice and Trusteeship Council. Further, these Organs are being represented by the various Funds and Programmes/Departments and Offices/Subsidiaries/Functional and Regional Commissions and Other Entities etc. These representatives also have their offices at different locations in India. Therefore, Indian offices of these representatives of United Nations are basically part of United Nations. These offices are provided various privileges and immunities under Indian Laws.
The Central Government vide Notification No. 25/2012-Service Tax dated 20.06.2012 (w.e.f. 01.07.2012) granted exemption from payment service tax on all the taxable services to United Nations or a specified International Organization. Further, ‘specified International Organization’ is defined as an international organisation declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply.
The Notification No. 25/2012-ST dated 20.06.2012 (w.e.f. 01.07.2012) is read as under:
1. Services provided to the United Nations or a specified international organization;
As per clause 2(zf) of the notification:
“Specified International Organization” means an international organisation declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply.”
Section 3 of the United Nations (Privileges and Immunities) Act, 1947 as reproduced below:-
“3. Power to confer certain privileges and immunities on other international organisation and their representatives and officers.-
Where in pursuance of any international agreement, convention or other instrument it is necessary to accord to any international organisation and its representatives and officers privileges and immunities in India similar to those contained in the provisions set out in the Schedule, the Central Government may, by notification 2* in the Official Gazette, declare that the provisions set out in the Schedule shall, subject to such modifications, if any, as it may consider necessary or expedient for giving effect to the said agreement, convention or other instrument, apply mutatis mutandis to the international organisation specified in the notification and its representatives and officers, and thereupon the said provisions shall apply accordingly and, notwithstanding anything to the contrary contained in any other law, shall in such application have the force of law in India.”
Therefore, section 3 of the United Nations (Privileges and Immunities) Act, 1947 only talks about the other International Organisation which are separately notified by the Central Government.
The International Organization notified by the Central Government for the purpose of Section 3 of The United Nations (Privileges and Immunities) Act, 1947 are:
1) International Civil Aviation Organisation
2) World Health Organisation
3) International Labor Organisation
4) Food and Agriculture Organisation of the United Nations
5) UN Educational, Scientific and Cultural Organisation (UNESCO)
6) International Monetary Fund (IMF)
7) International Bank for Reconstruction and Development
8) Universal Postal Union
9) International Telecommunication Union
10) World Meteorological Organisation
11) Permanent Central Opium Board
12) International Hydrographic Bureau
13) Commissioner for Indus Waters, Government of Pakistan and his advisers and assistants
14) Asian African Legal Consultative Committee
15) Commonwealth Asia Pacific Youth Development Centre, Chandigarh
16) Delegation of Commission of European Community
17) Customs Co-operation Council
18) Asia Pacific Telecommunity
19) International Centre of Public Enterprises in Developing Countries, Ljubljana (Yugoslavia)
20) International Centre for Genetic Engineering and Biotechnology
21) Asian Development Bank
22) South Asian Association for Regional Co-operation
23) International Jute Organisation, Dhaka, Bangladesh
Further, the section 2 of the United Nations (Privileges and Immunities) Act, 1947 states:-
“2. Conferment on United Nations and its representatives and officers of certain privileges and immunities.-
(1) Notwithstanding anything to the contrary contained in any other law, the provisions set out in the Schedule to this Act of the Convention on the Privileges and Immunities, adopted by the General Assembly of the United Nations on the 13th day of February, 1946, shall have the force of law in India.
(2) The Central Government may, from time to time, by notification in the Official Gazette, amend the Schedule in conformity with any amendments, duly made and adopted, of the provisions of the said Convention set out therein.”
Therefore, section 2 of the United Nations (Privileges and Immunities) Act, 1947 provides privileges and immunities to the United Nations and its representatives and officers adopted by the General Assembly of the United Nations on the 13th day of February, 1946. India is also member of United Nations General Assembly.
There is no connection between exemption provided to United Nations and International Organizations as both are independent from each other. Further, the reference to ‘The United Nations (Privileges and Immunities) Act, 1947’ in the definition of ‘Specified International Organisations’ is for limited purpose and has nothing to do with exemption provided to UNITED NATIONS.
As per the Notification No. 25/2012-ST dated 20.06.2012, to avail exemption one has to be either United Nations or a notified International Organization. Since Exemption Notification No. 25/2012-ST provides exemption to United Nations and there is no condition in this notification that any organizations/agency attached or affiliated to the United Nations also essentially requires to be notified by Central Govt. under Section 3 of the United Nations (Privileges and Immunities) Act, 1947, therefore exemption to United Nations is general in nature and services provided to UN-AIDS, UN-Women, UNDP, UNFPA, UNHCR, UNICEF, UNODC and UNOPS etc which are part of United Nations are not required to be notified by Central Govt. Hence exemption is available on the basis of mega exemption Notification No. 25/2012-ST dated 20.06.2012 itself.
Service Tax department has been regularly issuing Show Cause Notices to Service provider providing services to Indian offices of United Nations (i.e. UN-AIDS, UN-Women, UNDP, UNFPA, UNHCR, UNICEF, UNODC and UNOPS) and adjudicating officers are also passing order in favour of the department which in turn unnecessarily increasing the litigation at CESTAT level. CBEC should come out with a clarification on this issue.
(Author is a Service Tax Consultant and can be reached at firstname.lastname@example.org, Mob: +91 9911224940)