While users have nothing to worry about for the moment, it appears that service tax of 12.24 per cent may be levied on using such toilets, which charge an average of Rs 2 per visit.

This question has led a segment of the pay-and-use toilet industry to seek clarifications in response to the summons from the Hyderabad excise department to Sulabh International Social Service Organisation.

The non-profit organisation has been asked to furnish details of income earned from pay-and-use toilets for the last two years.

Cleaning services have been within the service tax net with effect from 16 June, 2005. The tax includes providing cleaning services to commercial or industrial buildings.

However, there is no service tax on cleaning services provided to government buildings and departments, since these are non-commercial in nature.

When contacted, service tax expert JK Mittal pointed out that the government had issued a circular in September 2004 that said, "constructions which are for the use of organisations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non-commercial in nature. Generally, government buildings or civil constructions are used for residential, office purposes or for providing civic amenities. Thus, government constructions are not taxable normally".

The excise department has asked Sulabh to produce copies of agreements and work orders with various municipalities and local bodies for construction, maintenance and repair of pay-and-use toilets and income earned from these toilets.

Central Board of Excise and Customs officials said they were not aware of the issue. "The summons must have been issued locally. Our understanding is that pay-and-use toilets do not come under service tax," a CBEC official said.

Sources said the organisation, in its response to the summons, submitted that there was no service tax liability on the amount collected from pay-and-use toilets.

So far Sulabh International Social Service organisation has converted 1.2 million bucket toilets into "twin pit pour flush compost toilets" now know as Sulabh Shauchalaya.

Its operations extend across 27 states, 5 Union Territories, 455 districts and 1,080 towns all over the country. Sulabh International Social Service organisation is also working in Afghanistan and Bhutan.

The organisation has entered into agreements with the municipal corporation in various cities to run the public toilet on "pay and use basis". The organisation is allowed to collect a nominal amount from the users of these toilets and maintain the same.