Sale of Application Forms, Tender Papers and Publicity Work by Odisha State Housing Board Not Taxable as Services: CESTAT [Read Order]

The Kolkata Bench of the Customs, Excise, andService Tax Appellate Tribunal (CESTAT) ruled that activities such as the sale of application forms, tender papers, and publicity work carried out by the Odisha State Housing Board cannot be considered as taxable services.

The appellant, Odisha State Housing Board, was constituted under the Orissa Housing Board Act, 1968 and functions directly under the Government of Odisha.

A show cause notice was issued demanding service tax under the category of “Real Estate Agency Service” for the period 2007-08 to 2011-12. The Commissioner confirmed the demand by order, which led the appellant to approach the Tribunal.

The appellant’s counsel argued that the Board was carrying out statutory and sovereign functions of the State Government and that all collections were deposited in the State exchequer. They explained that the sale of application forms and tender papers was not a service at all.

The counsel also argued that under Section 66Dof the Finance Act, services rendered by the Government are exempt, and since the Housing Board is part of the Government of Odisha, no service tax was payable. Reliance was placed on the decision of Rajasthan Housing Board v. CCE, where a similar demand had been set aside.

The revenue counsel argued that the Housing Board had been providing various services without paying service tax and supported the Commissioner’s order.

The two-member bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that the Housing Board is not a commercial entity but a statutory body performing sovereign functions for the Government of Odisha.

The tribunal pointed out that all collections made by the Board were transferred to the State exchequer and were in the nature of statutory levies. The tribunal explained that these activities could not be treated as taxable services, relying on precedents such as Rajasthan Housing Board, Maharashtra Industrial Development Corporation, and Karnataka Industrial Areas Development Board.

The tribunal further observed that the Board had not collected service tax from its clients and had acted under a bona fide belief that its activities were exempt. It found no evidence of suppression of facts and held that the extended period of limitation could not be invoked. The appeal was allowed and the demand was set aside.

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