Supreme Court to Decide if GLDC’s Activities Like Soil Conservation, Land Reclamation are Liable to Service Tax [Read Order]
The Supreme Court will decide whether the GLDC’s soil conservation and land reclamation activities are liable to service tax or exempt as government functions.
Service-tax-taxscan
Service-tax-taxscan
In a recent development, the Supreme Court of India agreed to hear an appeal filed by the Commissioner of CGST and Central Excise against the Gujarat State Land Development Corporation Ltd. The case concerns whether the corporation’s activities, including soil conservation and land reclamation schemes, are liable to service tax under the Finance Act, 1994.
The appeal arises from a judgment of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which had set aside the service tax demand raised against the state-owned corporation.
The department had alleged that the corporation’s activities fell under taxable categories such as “Business Auxiliary Service,” “Supply of Tangible Goods Service,” and “Rent-a-Cab Service.” It was argued that the corporation provided services to the Government of Gujarat and received grants that amounted to consideration for taxable services.
Master the Latest Amendments in Income Tax Act Click here
The corporation, on the other hand, argued that it was a government undertaking created solely to assist the State Government in implementing public welfare schemes for soil conservation and land reclamation.
The CESTAT bench comprising Mr. Ramesh Nair (Judicial Member) and Mr. Raju (Technical Member) observed that the corporation’s activities were part of the Government’s public welfare programs and explained that soil conservation and land reclamation clearly fall within the term “conservancy” used in the exemption notification.
The tribunal further observed that the funds received from the State Government were reimbursements for administrative expenses and did not constitute taxable consideration. It set aside the entire service tax demand, interest, and penalties against the corporation. The Department appealed to the Supreme Court, challenging the Tribunal’s interpretation of the exemption.
The bench comprising Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh observed that the explanation given by the Department for delay in serving notice was satisfactory and directed the issuance of a fresh notice to the respondent, returnable on 11 November 2025.
The court also directed that the respondent must file its counter-affidavit and reply before the next hearing.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
