Service tax applicability on Construction of college Building

[ROHIT GOEL]

Our clients had received certain amounts from a private college (Registered u/s 12AA) for construction of building in 2016. The primary contract was signed in 2012 and till July 2014, the client was utilising service tax exemption under SNo 9 of NN 25/2012 (auxiliary education services) and not paying any service tax.

However, such line item was deleted from the notification on 11.7.2014 but client did not discharge tax on receipts in 2016 also. The matter is currently under appeal after being decided against the client in adjudication.

Can now it be claimed that service is exempt under SNo 13 of NN 25/2012 which grants exemption for construction of building owned by entity registered u/s 12AA and meant predominantly for religious use. I recently came across Principal Bench Delhi decision in Service Tax Appeal No. 50770 of 2022-SM in case of M/s. S. Kumar Builders - 2022 (11) TMI 47 - CESTAT NEW DELHI, where it was held that even education would be deemed to be covered under serial no. 13 and thus construction of school for a 12AA trust was held to be exempt.

Would like the views of the experts?

AI Summary

Construction exemption for charitable trusts may cover college buildings, supporting merits and limitation defences in tax disputes.
Exemption under serial no. 13 of Notification No. 25/2012 can apply to construction of buildings owned by entities registered under section 12AA when used predominantly for religious or charitable purposes; tribunal authority has held educational institutions may be covered and that decision may be relied on for merits and limitation/penalty defences based on bona fide belief. Counsel should confirm whether auxiliary education exemption under serial no. 9 applied prior to its deletion and verify that the case record supports factual elements and the statutory definition of education services before advancing the claim.