2026-VIL-1509-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Sovereign and Statutory Functions - Certification of SOFTEX Forms and Issuance of No-Objection Certificates - Public Authority Performing Government Functions – Appellant collected charges for certification of SOFTEX forms and issuance of No-Objection Certificates to STP and software exporting units - Whether activities of certification and issuance of No-Objection Certificates are sovereign or public authority functions outside scope of Service Tax or constitute taxable Business Support Services - HELD - Mere fact that activity is regulated by law or that organisation has been authorised by Government to perform activity does not by itself convert every such activity into sovereign function. Distinction must be maintained between activity which can only be performed by State in exercise of sovereign authority and service rendered by autonomous body for facilitating business operations of its clients or members - Certification of SOFTEX forms, issuance of No-Objection Certificates and assistance rendered to STP units are intrinsically connected with business activities of software exporters. Such certification and approvals facilitate their exports, foreign exchange realisation and compliance with regulatory framework - Appellant is providing assistance and support which enables concerned units to carry on their business and export activities. Services have nexus with business or commerce and are covered by scope of Business Support Service. Neither Foreign Trade Development and Regulation Act nor FEMA prescribes impugned amount as statutory levy payable to Government – The charges are credited to separate fund maintained by STPI and utilised towards its establishment and administrative expenditure and not deposited into Government Treasury as tax, cess, fee or compulsory exaction. The fact that charges may have been approved by Governing Council of STPI does not alter their character - Approval of fee by Governing body of autonomous society cannot be equated with statutory levy imposed by Parliament or under Authority of Statute - Activities of certification of SOFTEX forms, issuance of NOC and allied assistance rendered by Appellant to STP and Software Exporting Units cannot be regarded as sovereign and public authority functions. Charges collected are not compulsory statutory levies payable into Govt Treasury, they represent consideration collected for services rendered to concerned business entities and duties are appropriately taxable under Business Support Service – The appeals are dismissed
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