Works contract for educational institutions not taxable where used solely for education; departmental challenge to deletion of demand failed.

Works contract services used for constructing educational institutions were treated as non-taxable where the buildings were used solely for education and not for profit. Following its earlier ruling in the appellant's own case on similar services, CESTAT held that the Department had shown no material to establish that Periyar Maniammai University and Periyar Teacher Training Institute were anything other than educational institutions used principally or solely for education. The service tax demand on the works contract services was therefore unsustainable, and the Department's appeal against deletion of the demand failed.

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Issues: Whether the works contract services rendered for Periyar Maniammai University and Periyar Teacher Training Institute were liable to service tax as services to private educational institutions, and whether the Revenue's appeal against deletion of the demand was maintainable.

Analysis: The Tribunal noted that in the appellant's own earlier appeal arising from the same order, the demand relating to construction services for private educational institutions had already been set aside. That earlier decision had treated construction of educational institutions as non-taxable on the footing of the Board's circular clarifying that such construction, when used solely for educational purposes and not for profit, is not commercial in nature. In the present appeal, the Department sought to treat the two institutions as private educational institutions, but no material was shown to establish that they were not used principally or solely for education. The Tribunal held that, once the demand for similar services to private educational institutions had already been held unsustainable in the appellant's own case, the Department's challenge to deletion of demand for these institutions could not succeed.

Conclusion: The service tax demand on the works contract services rendered to Periyar Maniammai University and Periyar Teacher Training Institute was not sustainable, and the Department's appeal failed.

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