Club or Association Service
– Meaning of “Charitable”
The CBEC has issued Circular
No. 84/2/2006-ST, dated 19-9-2006, defining the meaning of the word charity as
“aid given to the poor, the suffering or the general community for religious,
educational, 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”.
The Circular further states
that the meaning of charity and charitable are as per the Black Law Dictionary
and distanced itself from the meaning given under Income-tax Act. It has asked
its officer to examine the matter on a case-by-case basis and the decision
should be made after taking into account all materials and facts and statutory
provisions.
It may be kept in mind that the
Service Tax law, exclude any person or body of persons engaged in the activity
having objectives which are in the nature of services and are of a charitable,
religious or political nature under Club or Association Services as defined u/s
65(25a). The issue has therefore arisen that whether a public charitable
institution as defined under Income Tax law, is exempt under Club or Association
service. The CBEC has made its intention known by this Circular that it prefers
to go by the Black Law Dictionary instead of our own Income- tax Act. By this
clarification, the CBEC may be hinting that the trade bodies and association are
intended to be covered under Service Tax.
E-payments by large
tax-payers (above Rs. 50 lakhs)
In the last issue, we have
discussed DGST instructions making e-payments mandatory for large tax-payers.
These instructions are now given statutory backing by issuance of Notification
No. 27/2006 dated 21-9-2006.
