Questions have been raised by the panchayat body and panchayati raj institutions whether the government can impose the service tax on a panchayat ghar funded by the District Rural Development Agency scheme.
The issue was deliberated upon at the Rachol panchayat body meeting when Sarpanch Joseph Vaz placed before the meeting the TCP’s correspondence asking the panchayat to pay the service tax amounting to Rs 17,000. Sarpanch Vaz told the media that the panchayat was shocked and surprised to receive the TCP’s letter of payment of service tax when the panchayat ghar is totally funded by a government agency. He also raised the issue of financial status of the panchayat body, saying the government should frame a policy wherein weaker panchayats are waived from the payment of service tax. “Rachol is one of the weaker panchayats in Goa. We had constructed the panchayat ghar under DRDA scheme, but now the TCP has asked the panchayat to first clear the service tax before issuing the completion certificate”, he said.
The Rachol panchayat has finally decided to pay the service tax but with a condition to file a petition before the government to refund the amount taking into account the financial status of the panchayat body and the fact that the panchayat ghar project was funded by a government agency.
Chairman of the Goa Panchayati Raj Institutions J Santano Rodrigues questioned the rationale behind the TCP decision to charge service tax on the Rachol panchayat. “The panchayat ghar is a purely administrative project. There are no commercial shops in the complex. The TCP should reconsider the decision”, Santano demanded.
