2017 (9) TMI 86 - AT - Service Tax

Tax appeal: Education buildings' use key in service tax liability. Evidence crucial in tax disputes.

Banna Ram Choudhary Versus CCE, Jaipur

The appeal focused on tax liability for construction services under the Finance Act, 1994. The appellant contested a service tax liability of ... Construction of commercial or industrial complex Services - case of appellant is that Since these are buildings for educational institutions, they cannot be called as commercial buildings and the construction is not leviable to tax - Held that: - Buildings used for educational purpose by recognized educational institutions cannot be categorized as “commercial buildings” - The use of the building will decide the tax liability. Regarding individual residence claimed to have been used for occupation by the persons, we find no categorical supporting evidences have been submitted by the appellant. No detailed examination has also been made by the lower authorities. Matter requires re-examination - appeal allowed by way of remand. Issues involved:1. Tax liability under 'Construction of commercial or industrial complex' services.2. Classification of buildings constructed for educational institutions.3. Evidence required to establish tax liability for construction services.Analysis:1. The appeal addressed the tax liability under 'Construction of commercial or industrial complex' services as per Section 65(25b) and Section 65(105)(wzq) of the Finance Act, 1994. The appellant, engaged in construction activities, challenged the order confirming a service tax liability of &8377; 15,55,898/- along with penalties under Section 76 and 77 of the Act. The dispute centered around the nature of buildings constructed by the appellant and their classification for tax purposes.2. The appellant argued that the buildings constructed were for educational institutions approved by competent authorities like AICTE and affiliated to recognized universities. They contended that buildings used for educational purposes by such institutions should not be considered 'commercial buildings' subject to tax liability. The Tribunal noted that the use of the building, rather than the nature of the owner or fee collected, determines tax liability under the relevant service category. Emphasis was placed on the educational nature of the buildings and their primary purpose, leading to a reevaluation of the impugned order.3. The Tribunal found that the appellant failed to provide categorical evidence regarding the nature of various buildings constructed, especially individual residences claimed to be exempt from tax as they were for personal occupation. While the appellant asserted they could furnish supporting evidence such as local authority approvals, no detailed examination had been conducted by the lower authorities. Consequently, the Tribunal set aside the impugned order and remanded the matter for a fresh decision by the Original Authority, granting the appellant an opportunity to submit all necessary supporting evidence before a final decision is made. The appeal was allowed by way of remand, emphasizing the importance of substantiating claims with appropriate evidence in tax liability disputes.