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2016 (3) TMI 832 - PATNA HIGH COURT

2016 (3) TMI 832 - PATNA HIGH COURT - 2016 (42) S.T.R. 681 (Pat.) , [2016] 91 VST 426 (Pat) - Service tax liability - Construction of academic complex of Indian Institute of Technology (IIT) - Held that:- the Indian Institute of Technology, Bihta, Patna, whose academic block was to be constructed by the petitioner, was set up by an Act of Parliament, i.e., Indian Institutes of Technology Act, 1961 (59 of 1961) as an institute of national importance under Article 248 of the Constitution of India .....

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or collected as it is not chargeable levy and - Entitlement for refund of Service tax - Undue enrichment - Held that:- the payment of service tax has not been made by the numerous consumers and collected by the petitioner. It is paid by the petitioner alone. The petitioner is entitled for the reimbursement of the amount of service tax by respondent No. 4 in terms of the letter of award of contract. Such payment of service tax by the petitioner is not indirect collection of taxes but the di .....

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MR. HEMANT GUPTA, J. For the Petitioner : Mr. D.V.Pathy, Advocate Mrs. Manju Jha, Advocate For the Respondent : Mrs. Nivedita Nirvikar, Advocate, Mr. Binay Kumar, Advocate, Mr. Jayant Roy choudhary, Advocate For The Accountant General : Mr. Madhuresh Prasad, Advocate JUDGMENT (Per: HONOURABLE MR. JUSTICE HEMANT GUPTA) The petitioner is a Limited Company engaged in the business of execution of works contract. The Indian Institute of Technology - Respondent No.4 (for short herein after referred as .....

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t petition, from the letter of award reads as under:- 4.2. SALES TAX ON WORKS CONTRACT AND TURNOVER TAX The award of work under this contract is on Works Contract Basis . You shall be responsible for payment of any tax levied on the transfer of property in goods involved in the works Contract under Bihar State Government Sales Tax Act and the rules made thereunder including amendments, if any. This liability shall be to your account and it shall not be reimbursed by NBCC. xxx xxxx xxxxxxxxxxx xx .....

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ay service tax was also issued to the Petitioner by the Superintendent of Service Tax, Range -XVIII, Division - 2, Service Tax Commissoinerate, Kolkata, on 13.11.2013. Such levy of service tax was again reiterated vide communication, dated 05.09.2014. 3. Respondent No. 2, Indian Audit and Account Department, raised audit objection on 30th June, 2015 to the effect that service provider undertaking construction activity of educational institutions are not required to pay service tax. In terms of t .....

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erted by the Finance Act, 2012 with effect from 1st July, 2012, wherein negative list of the services on which service tax is not payable was inserted. 5. In counter affidavit, the stand of respondent No.1 is that the construction activity is taxable service under the provision of Section 65 of the Finance Act, 1994. It is pointed out that Notification No.25/2012, dated 20th June, 2012, has exempted specified services from the levy of service tax subject to fulfillment of the conditions stipulat .....

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ne, 2012, as it is not a Governmental Authority within the meaning of Notification dated 30th January, 2014. Thus the service tax is payable by the Institute. The reliance is also placed on a circular issued on 19th September, 2013, by CBDT clarifying the ambit and scope of levy of service tax pursuant to a representation by several educational institutions. It is clarified that the service provided to Institute is related to construction work but is not exempt from payment of service tax. Annex .....

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………. (31) local authority means - (a) a Panchayat as referred to in clause (d) of article 243 of the Constitution; (b) a Municipality as referred to in clause (e) of article 243P of the Constitution; (c) a Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006); (e) …….. xxxx .....

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to do, if may, be special order in each case, exempt any taxable service of any specified description from the payment of whole or any part of the service tax leviable thereon, under circumstances of exceptional nature to be stated in such order. The Notification dated 20th June, 2012 (Annexure 11) has been issued under Section 93 of the Finance Act, 1994. The relevant clause reads as under :- 2. Definitions.- For the purpose of this notification, unless the context otherwise requires, xxxxx xx .....

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ng, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (c) a structure meant predominantl .....

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ding the notification dated 20th June, 2012 reads as under:- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extrao .....

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e 243W of the Constitution;‟ 7. Our attention has also been drawn to Notification No.6/2015 Service Tax, dated 1st March, 2015, amending the Notification dated 20th June, 2012. By the said Notification, item nos. (a), (c) and (f) of Entry 12 as reproduced above, stands omitted. 8. The petitioner was granted the contract for construction on 20th December, 2012. But even before that date on 20th June, 2012, with effect from 1st July, 2012, the services provided to the Government, local autho .....

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at the Indian Institute of Technology, Bihta, Patna, whose academic block was to be constructed by the petitioner, was set up by an Act of Parliament, i.e., Indian Institutes of Technology Act, 1961 (59 of 1961) as an institute of national importance under Article 248 of the Constitution of India read with 7th Schedule List I. As per the definition of Governmental Authority as amended on 30th January 2014, an authority or board or any other body set up by an Act of Parliament or State Legislatur .....

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tion from benefit of service tax. Such provision in the notification dated 30th January 2014 is applicable to both parts of clause 2(s) and not to sub-clause (ii) of clause 2(s) alone of the said Notification. 11. We have heard learned counsel for the parties and found the arguments raised by Mrs. Nivedita Nirvikar are not sustainable in law. The Governmental Authority as defined in the Notification dated 30th January, 2014, means an authority or a board or any other body set up by an Act of Par .....

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or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution is relatable to only sub-clause (ii) of Clause 2(s). It means that an authority established by Government should have 90% or more participation by way of equity or control to carry out any function entrusted to a municipality under Article 243W of the Constitution to be eligible for exemption. The Authority set up by an Act of Parliament or State Legisla .....

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