Reverse charge service tax on an educational institute failed because it was not a business entity or body corporate.

Reverse charge service tax applied only where the recipient was a business entity or body corporate. The definition of "business entity" under Section 65B(17) of the Finance Act, 1994 covered persons ordinarily carrying on industry, commerce or business, but the institute's governing statute showed its core functions were instruction, research and dissemination of knowledge, not commercial activity. The industrial law meaning of "industry" was held inapplicable in the taxing context, and the institute did not fall within "body corporate" under Section 65(14) of the Finance Act, 1994 read with the Companies Act definition. Accordingly, it was not liable under reverse charge for manpower supply and works contract services.

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Issues: Whether the respondent, being an institute of technology, was a business entity or body corporate liable to pay service tax under reverse charge on manpower supply and works contract services.

Analysis: Liability under reverse charge arose only if the recipient was a business entity registered as a body corporate. The definition of business entity in Section 65B(17) of the Finance Act, 1994 covered persons ordinarily carrying on activities relating to industry, commerce or business. The institute's governing statute showed that its core object was instruction, research, advancement of learning and dissemination of knowledge, not commercial activity. The relied-upon industrial law meaning of "industry" was held inapplicable in the taxing context, and the definition of body corporate under Section 65(14) of the Finance Act, 1994 read with Section 2(7)(c) of the Companies Act, 1956 did not bring the institute within that category.

Conclusion: The respondent was not liable to pay service tax under reverse charge on the impugned services.

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