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Upholds Sovereign Function, Dismisses Rs 3.44 Crore Service Tax on Forest Fees
Shield Forest Fees from Service Tax
In a significant ruling that reaffirms the boundaries of , the has dismissed a tax appeal by the Revenue seeking to impose service tax of over Rs 3.44 crore on fees collected by the Deputy Conservator of Forests from visitors to the Gir Forest. A Division Bench comprising Justice Bhargav D. Karia and Justice Pranav Trivedi upheld the earlier decision of the and held that the fees collected by the forest officer in his are not subject to service tax as they constitute of the State.
The Tax Demand and the Forest Officer
The dispute arose when the , issued show-cause notices for the , demanding service tax on entry fees, camera fees, and other charges collected by the Deputy Conservator of Forests from tourists visiting the Gir Forest and Devaliya Park. The adjudicating authority held that the Deputy Conservator fell within the definition of “” under , as he was engaged in planning, scheduling, or organizing tours by vehicles. Consequently, a demand of Rs 3,44,77,774 along with interest and penalty was confirmed.
Revenue's Argument: or Not?
The Revenue, represented by advocate , argued that the Deputy Conservator of Forests was providing by charging fees for entry, camera usage, and vehicle access. It contended that these activities satisfied the ingredients of a “” as defined under the Finance Act, and therefore, the officer was liable to pay service tax and obtain registration under the relevant category.
Court's Reasoning: No Tax on
The High Court, however, found no merit in the Revenue's appeal. Relying on its earlier judgment in Tax Appeal No. 505 of 2025 and allied appeals, the court observed that the Deputy Conservator of Forests was acting in his under the , and the fees collected were compulsory levies credited to the consolidated fund of the State. The court categorically held that these activities were and could not be brought within the purview of service tax. It further noted that even if a valid claim existed, it would lie against the , not against the officer personally.
Key Observations from the Judgment
The court made several pivotal observations:
“The Deputy Conservator of Forest was discharging his sovereign function which cannot be brought within the purview of Service Tax and was not discharging any by acting as a Deputy Conservator of Forests.”
“The amount collected in his is a fee in the nature of which is ultimately credited to the consolidated funds of the .”
“The levy of Service Tax is sought to be imposed on the income of the State Government, which is not permitted by the or any statutory provisions.”
“Even if it is assumed that the department had any legal or valid case, the same will only lie against the and not against the respondent who is the officer of the State of Gujarat.”
Final Verdict: Appeal Dismissed
The High Court concluded that no arose for consideration and dismissed the appeal. The decision reinforces the principle that statutory fees collected by government officers in discharge of are outside the ambit of service tax. This ruling provides clarity for similar cases involving fees collected by forest departments and other government bodies across the country, shielding them from tax demands that seek to treat sovereign activities as commercial services.
