In Brief
Agricultural Produce Market Committees in Rajasthan sought exemption from service tax on fees collected for renting/leasing shops and land to traders. They claimed the activity was mandatory and statutory under the Rajasthan Agricultural Produce Markets Act, 1961, and fell within the exemption granted by Board Circular No. 89/7/2006 for activities performed by public authorities as statutory obligations. The Supreme Court held that exemptions in taxing statutes must be strictly construed. Section 9(2) of the 1961 Act uses 'may' (discretionary), not 'shall' (mandatory), so renting activities are not mandatory statutory duties. Since the fees go to the Market Committee Fund (not Government Treasury) and activities are discretionary, the exemption conditions are not met. The Court dismissed all appeals, finding the Market Committees liable for service tax on renting of immovable property for the period up to 30.06.2012.
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