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Raje writes to FM for clarification on Service tax on tubewell contractors

Chief Minister Raje has expressed her concern on notices issued by central excise officers to over a hundred Public Health and Engineering Department contractors in the district of Jhunjhnu, Sikar and Bikaner regarding service tax liabilities for construction of tube wells and related services.

In a letter addressed to the Union Finance Minister Arun Jaitley, Raje said notices have been issued by field officers under Central Excise Commissioner, Jodhpur region to the contractors who have been awarded work orders by PHED for tubewell construction and related activities. PHED officials have also been sent letters by Central Excise asking them to provide lists of service providers. She said issue of notices have resulted in serious consternation among the PHED contractors.

The Chief Minister said levying service tax on an essential state government function would simply mean a lumpsum transfer of funds from the state government kitty to the central government which shall affect the financial management of the state exchequer. She said it appears that the public policy impact and public fisc consideration were not factored in during issue of these notices by the field officers under Commissioner Central Excise, Jodhpur. At the least a consultation should have been held with the officers of PHED, she added.

Raje requested to Jaitley that a clarification notification be issued at the earliest applied with retrospective effect, unambiguously stating that boring/construction of tubewells etc. are covered under the exemption under Clause 12 and Clause 25; and the various activities such as construction, erection, installation etc. mentioned in the 2012 notification issued by Ministry of Finance, Govt. of India u/s 66B of the Finance Act, 1994 are only indicative.

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