GOVT BODIES COME IN SERVICE TAX NET: NO ESCAPE

The revenue department has issued a clarification which makes it mandatory for Government bodies rendering taxable services including railways, security service at airports and others, to pay service tax. However, if one Central Government department renders service to other, no service tax will be levied, as this would not be treated as two separate entities. The same would be the case if one State
Government department provides service to another in the same state. But, if one Central Government department provides a taxable service to a public sector undertaking, it would be treated as one entity providing service to other, and would attract service tax.