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TMI Blog2024 (7) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... ust - Letter dt. 11.11.2008 (iii) The Bhavani Educational Service Trust - Order dt. 10.12.2008 (iii) Nandha Engineering College - Nandha Educational Trust dt. 30.4.2009 (iv) K. Ramankrishnan Health & Educational Trust - work order dt. 7.1.2012 2. The Department was of the view that the construction activities carried out by the appellant would fall within the definition of 'Commercial or Industrial Construction Services' as defined under Section 65 (25b) of the Finance Act, 1994. Show cause notice dt. 19.3.2013 was issued for the period October 2007 to March 2012 demanding service tax under CICS along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Aggrieved by such order, the appellant has filed the present appeal. 3. Ld. Consultant Shri N.K.Bharath Kumar appeared and argued for the appellant. It is submitted that the construction works carried out by the appellant are for educational institutions. These construction activities do not fall under the category of 'Commercial Construction Services' and therefore demand of service tax under CICS cannot sustain. It is submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded period. When audit was conducted on July 21st to 24th in 2008 all the documents were verified by the department and no objection was raised in this regard to the non-payment of service tax for construction of educational institutions. Since these educational institutions are provided for non-profit organizations, the appellant were under bonafide belief that they were not liable to pay service tax as clarified by the Board circular. It is submitted that there is no positive act alleged against the appellant for suppressing facts with intent to evade payment of service tax. There are no grounds for invoking the extended period and the SCN therefore is time-barred. The issue as to whether the services provided to educational institutions is subject to levy of service tax is also interpretational in nature as there were several litigations pending before various forums. It is prayed that the appeal may be allowed. 4. Ld. A.R Shri M. Selvakumar appeared and argued for the Department. The findings in the impugned order were reiterated. 5. Heard both sides. 6. The issue that arises for analyzation is whether the appellant is liable to pay service tax during the disputed period und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purpose of profit are not taxable being non-commercial in nature. Relevant part of the circular reads as under : "13. Construction services (commercial and industrial buildings or civil structures) : 13.1 Services provided by a commercial concern in relation to construction, repairs, alteration or restoration of such buildings, civil structures or parts thereof which are used, occupied or engaged for the purposes of commerce and industry are covered under this new levy. In this case the service is essentially provided to a person who gets such constructions etc. done, by a building or civil contractor. Estate builders who construct buildings/civil structures for themselves (for their own use, renting it out or for selling it subsequently) are not taxable service providers. However, if such real estate owners hire contractor/contractors, the payment made to such contractor would be subjected to service tax under this head. The tax is limited only in case the service is provided by a commercial concern. Thus service provided by a labourer engaged direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral circulars were withdrawn, the circular dt. 17.09.2004 was not withdrawn by the Department and is in force during the disputed period. The relevant part of the Master Circular is reproduced as under : "3. Taking into account the recommendations made in the report submitted by Shri T.R. Rustagi, views/comments/suggestions received from the trade and industry associations, the departmental officers and all material facts, it has been decided that certain service tax circulars/clarifications/instructions which were previously issued with some objectives, but which have since then lost their relevance or have become anachronistic due to changes in law, procedures, etc., should be withdrawn. Accordingly, the following circulars/clarifications/instructions stand withdrawn with immediate effect, - Sl. No. Circular No./F. No. Date 1 1/1/94-ST 29-6-1994 2 2/2/94-ST 8-7-1994 3 4/4/94-ST 6-9-1994 4 5/5/94-ST 11-10-1994 5 6/1/95-ST 2-5-1995 6 7/1/96-ST 29-2-1996 7 8/2/96-ST 11-3-1996 8 9/3/96-ST 11-3-1996 9 13/7/96-ST 20-9-1996 10 15/9/96-ST 4-10-1996 11 16/10/96-ST 15-10-1996 12 19/13/96-ST 21-11-1996 13 20/14/96-ST 31-12-1996 14 21/1/97-ST 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oning that construction of Schools, Colleges, Hospitals and Charitable Institutions are not exempted. 3. Having informed the trade in 2008 vide Circular 98/1/2008 dated 04/01/2008 that existing pattern of payment of Service Tax for ongoing projects as on 01.06.2007 should only be under abatement method under Notn.01/2006 and not under works contract, can the Department now demand differential Service tax even for the ongoing projects on 01/06/2007 under Works Contract. 4. When Service tax has been discharged by the builders availing Notification 1/2006 and tax paid on the abated portion wherever material is used, is it correct for the Department to state that even in these cases the classification should be under Works Contract and demand differential Service tax for the past Five Years. 5. When the Builders have filed their ST3 returns disclosing all the details and their units subjected to frequent audit by the Department in which all the above aspects have been thoroughly examined and no objection raised, can Service Tax now be demanded on the above two issues for the past five years invoking the provisions of Section 73 (10 of the Finance Act, 1994. Reply to Query : 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder No.A/11309-11310/2023 dated 22.06.2023, the Tribunal considered the very same issue as to whether the demand of service tax raised on construction of educational institutions is sustainable or not. Relevant paras read as under : "5.3 We also find that in view of the various documentary evidence and certificates and registrations of the Appellants and analysis thereof and also considering the observations of the ld. Commissioner (Appeals) on this, there is no doubt that building constructed by the Contractor is medical college building. From the Resolution No. HSP/1007/3247/PARK2/A dated 27.05.2009, issued by the Government of Gujarat, Certificate dated 26.05.2009 issued by the Registrar under the Registration of the Societies Act, 1860, Certificate dated 26.05.2009 issued under the Bombay Public Trust Act, 1950, Registration under Section 12AA of the Income Tax Act, 1961 and Memorandum of Association framed under the Act XXI of the Registration of the 1860 for the registration of Literary Scientific and Charitable Society it is clear that the construction of building for which refund claim has been filed is used for educational purpose and the object of the of the use of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object of the organization would be considered as charitable organization. Accordingly, Service Tax would not be charged. It is further held that merely charging of fees will not make position that the appellant institute is not a non-commercial concern. 5.5. In view of the above judgment it is settled that merely by charging fees or higher fees an institution which otherwise, belongs to a Charitable Trust cannot lose its identity as non-commercial entity. 5.6 We note that C.B.E. & C. had issued Circular No. 80/10/2004-S.T., dated 17-9-2004 and in Para 13.2 clarified that the leviability of Service Tax was primarily dependent upon the use of the building or civil structure. Further, it clarified that it was to be ascertained where building or civil structure was used or to be used for commercial or industrial purpose and further required to gather the information as to whether the buildings or civil structures were being used or to be used for the purpose of making profit or not and clarified that if the building or civil structure was used or to be used not for the purposes of profit then the same are not taxable. When the property in question is not used by Appellant for comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced before the adjudicating authority, the APHMHIDC has been stated to be engaged in creating infrastructure facilities of accommodation for medical institutions and quarters, and maintenance of hospital buildings, procurement and distribution of drugs, surgical and consumables and equipment and for storage of these items and that the said APHMHIDC is functioning as no profit and no loss basis. The said hand-out also specifically states that it is an enterprise of Govt. of Andhra Pradesh. On perusal of the profile of NFC, it states that it has been established in the year 1971 as a major industrial unit of Department of Atomic Energy, Govt. of India and the complex is responsible for supply of fuel and reactor core components for all the nuclear power reactors operating in India. The said NFC has been clearly indicated as a Unit of Department of Atomic energy, Govt. of India. As regards the C-DAC, it is indicated in the profile of C-DAC that it is a premium R & D organisation of the Ministry of Electronics and Information Technology (MEIT) for carrying out R&D in IT, electronics, and associated areas. It can be seen from the said profiles of 2-3 units that they are all units of G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the guest houses which are constructed for religious institutions and charitable institutions are liable to tax. We find that the said judgment was delivered by the Hon'ble High Court on the facts of that case inasmuch there the Hon'ble High Court was considering in a writ challenge to a letter issued by the departmental authorities to TTDC for registering themselves as providers of accommodation services. It is to be seen that the Govt. of India by issuing Notification No. 25/2012-S.T. (Sl. No. 13(c) has very clearly recorded that the services rendered to "building owned by an entity registered under Section 12AA of the Income-tax Act and predominantly for religious use of general public are exempted." The Revenue's reliance on the decision of the TTDC case may not carry their case any further as the issue was different in that case. 13. Since we have disposed of the appeal on merits itself we are not recording any findings/observations on the various other submissions made by both sides; as also on limitation." 16. The Tribunal in the case of Vijayadeepa Constructions Private Ltd. Vs CGST & Central Excise, Coimbatore vide Final Order No.40536/2024 dt. 08.05.2024 had also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further the appellant has discharged appropriate service tax in regard to all other construction services. The appellant had not discharged service tax for constructions of educational institutions on a bonafide belief and also taking note of the clarifications issued by the Board as per circular dt. 17.09.2004. There is no positive act of suppression established by the department against the appellant. The issue is also interpretational in nature as there have been several litigations. The Board has also come forward to clarify the nature of construction services when provided to educational institutions. In such circumstances, there are no grounds for invoking the extended period and we hold the demand is time-barred. The issue of limitation is answered in favour of the appellant and against the Revenue. 19. In the result, the impugned order is set aside. The appeal is allowed with consequential relief, if any." 7. After appreciating the facts of this case and also following the decision of the Tribunal in the case of R.R. Thulasi Builders (I) Pvt. Ltd. (supra), we are of the considered opinion that the demand cannot sustain. 8. In the result, the impugned order is set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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