CESTAT Ruling: Odisha State Housing Board's Services Not Taxable
The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that the sale of application forms, tender papers, and publicity work by the Odisha State Housing Board are not taxable services.
Service TaxCestatOdisha State Housing BoardReal EstateStatutory FunctionsReal EstateSep 21, 2025
The Odisha State Housing Board, established under the Orissa Housing Board Act, 1968, functions directly under the Government of Odisha. A show cause notice was issued to the Board demanding service tax under the category of “Real Estate Agency Service” for the period 2007-08 to 2011-12. The Commissioner confirmed the demand, leading the appellant to approach the Tribunal.
The appellant’s counsel argued that the Board was carrying out statutory and sovereign functions of the State Government and that all collections were deposited in the State exchequer. They explained that the sale of application forms and tender papers was not a service at all. The counsel also argued that under Section 66D of the Finance Act, services rendered by the Government are exempt, and since the Housing Board is part of the Government of Odisha, no service tax was payable. They cited the decision of Rajasthan Housing Board v. CCE, where a similar demand had been set aside.
The revenue counsel argued that the Housing Board had been providing various services without paying service tax and supported the Commissioner’s order. However, the two-member bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that the Housing Board is not a commercial entity but a statutory body performing sovereign functions for the Government of Odisha.
The tribunal pointed out that all collections made by the Board were transferred to the State exchequer and were in the nature of statutory levies. The tribunal explained that these activities could not be treated as taxable services, relying on precedents such as Rajasthan Housing Board, Maharashtra Industrial Development Corporation, and Karnataka Industrial Areas Development Board. The tribunal further observed that the Board had not collected service tax from its clients and had acted under a bona fide belief that its activities were exempt. It found no evidence of suppression of facts and held that the extended period of limitation could not be invoked. The appeal was allowed, and the demand was set aside.
Frequently Asked Questions
What is the CESTAT?
CESTAT stands for the Customs, Excise, and Service Tax Appellate Tribunal. It is a quasi-judicial body that hears appeals against orders passed by the Commissioner of Central Excise, Customs, and Service Tax.
What was the main argument of the Odisha State Housing Board?
The main argument of the Odisha State Housing Board was that it was performing statutory and sovereign functions of the State Government, and all collections were deposited in the State exchequer. They also argued that under Section 66D of the Finance Act, services rendered by the Government are exempt.
What did the revenue counsel argue?
The revenue counsel argued that the Housing Board had been providing various services without paying service tax and supported the Commissioner’s order.
What was the decision of the CESTAT bench?
The CESTAT bench ruled that the Odisha State Housing Board is not a commercial entity but a statutory body performing sovereign functions for the Government of Odisha. They found that the activities could not be treated as taxable services and set aside the demand.
What precedent did the tribunal rely on?
The tribunal relied on precedents such as Rajasthan Housing Board, Maharashtra Industrial Development Corporation, and Karnataka Industrial Areas Development Board, which supported the exemption of services rendered by government bodies.
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