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2018 (5) TMI 487
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....tion of hospital building does not fall under the 'commercial or industrial construction service' for the reason that the hospital building is not used for commerce or industry as the hospital in the present case is run by a charitable trust. For this reason also the charitable trust is not a business or commerce hence the construction thereof does not fall within the definition of 'commercial or industrial construction service'. In this regard he place reliance on the following circulars and judgments. i. CBEC Circular No. 80/10/2004-ST dated 17/09/2004 ii. CBEC Circular No. 86/4/2004-ST dated 01/11/2006 iii. Commissioner of Service Tax - VII v. S M Sai Construction 2016 (42) STR 716 (Tri.Mumbai); iv. G Ramamoorthi Constructions (I) P Ltd v. Commissioner (Adj.), Coimbatore 2015 (40) STR 632 (Mad.) v. CST, New Delhi v. N S Associates Pvt. Ltd. 2018 (2) TMI 1041-CESTAT NEW DELHI 3. As regards the second issue is concerned i.e. service tax levy on GTA service availed and used for construction of building in special economic zone, he submits that as per SEZ Act, 2005, under Section 26(1)(e), the taxable service provided to a developer or a unit to carry on the....
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....judgments. i. Cosmic Dye Chemical v. Collector of Central Excise, Bombay 1995 (75) ELT 721 (SC); ii. Commissioner of Central Excise v. Chemphar Drug and Liniments 1989 (4) ELT 276 (SC) 7. Shri Dilip Shinde, Learned Assistant Commissioner (AR), appearing on behalf of Revenue, reiterates the findings in the impugned order. He further submits that the construction of hospital fall under the category of 'commercial or industrial construction service' for the reason that hospital is also engaged in commercial activities. Therefore, the construction service provided for construction of hospital is liable to service tax. 8. As regard the GTA service provided in relation to the construction of building of SEZ, he submits that the appellant is the recipient of the service who is only located in SEZ. Therefore, exemption provided for SEZ will not be available to the appellant. As regard the demand in respect of GTA service related to construction of hospital, with respect to the issue of time-bar, he claimed that the appellant have not provided the document in time and therefore, the second show cause got delayed to be issued hence the extended period was rightly invoked and non-....
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....al concern, even if on some of their activities (like holding campus interviews), they charge fee. Accordingly, these institutes were not liable to pay service tax prior to 1-5-2006 under the category of "manpower recruitment or supply service". As regards the period after 1-5-2006, decision should be taken after taking into account all material facts on case to case basis." 12. From the above clarification also it gets reinforced that construction of a building for non-commercial activity shall not be chargeable to service tax under 'commercial or industrial construction service'. This issue has been considered in various judgments. In the case of G Ramamoorthi Constructions (I) P Ltd (supra) the Hon'ble Madras High Court on the identical issue, the Court passed the following order: "7. A perusal of the impugned order, it appears that the first respondent has taken laborious efforts in order to make the petitioner ineligible to claim exemption of service tax in respect of constructions provided by them to the educational institutions by virtue of the Circular, dated 17-9-2004. It is not in dispute that the said Circular, dated 17-9-2004 provides exemption of service t....
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....ase on hand, GRCIPIL have failed to provide any evidence that the educational institutions to whom they provided the services of constructions had not been making systematic profits and that their sole aim is to serve the poor section of the public. Hence, I reject the claim that the educational services provided by GSET would be 'non-commercial' even when it is provided by charging fees from the beneficiaries." 8. It is pertinent to note that the petitioner has been claiming exemption from service tax towards the constructions provided for educational institutions and hospitals from October, 2008 to October, 2013 by filing ST-3 returns, which were also accepted by the department. However, in the year 2014, during the audit inspection, it was noticed that the petitioner provided construction services to various educational institutions, which according to the first respondent, had been making profits and that would be construed as commercial and thereby, the exemption claimed by the petitioner under Circular No. 80, dated 17-9-2004 cannot be extended. Accordingly, a notice, dated 21-4-2014 has been issued to the petitioner and thereafter, ultimately, the impugned proceedings wer....
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....er Supply case, which in my opinion, is unnecessary and the first respondent has shown excess enthusiasm while dealing with the issue, inasmuch as the issue involved in the present writ petition is altogether different and ratio decided in the above said decision by the Hon'ble Apex Court regarding the definition 'industry' for the purpose of settling the industrial disputes, cannot be applied to the case on hand as the present subject matter relates to Finance Act, under which, the Circular dated 17-9-2004 has been issued pertaining to the exemption of Service Tax in respect of construction services. Even assuming that the educational institution is an industry, it does not take away the benefit of exemption provided under the said Circular, if it is established that the constructions provided by the petitioner are used or to be used either not for commerce or not for industry. Therefore, the analysis given by the first respondent that the educational institutions to whom the petitioner provided are profit earning concerns and cannot be construed as non-commercial and thereby, they would be fallen within the ambit of "construction of new building primarily for the purpose of comme....
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....h orders within a period of four weeks from the date of receipt of copy of this order, after providing an opportunity to the petitioner. The petitioner is permitted to produce all relevant documents and also raise further objections if any, which shall be considered by the first respondent while passing the orders. 13. With the above observation, the writ petition is disposed of. No costs. Consequently, connected MP is closed." 13. A similar view was taken by the Tribunal in the case of SM Sai Construction (supra) wherein this Tribunal passed the following order: "6. We find that in view of the various documentary evidence and analysis thereof and also considering the observations of the Id. Commissioner (Appeals) on this, there is no doubt that building constructed by the respondent is college building which is carrying out Technical Education and same is approved by AICTE, Technical and Higher Education Department of Government of Maharashtra. The recipient of the service namely Vidya Prasarak Mandal, undisputedly a charitable trust registered with Bombay Public Trust Act, 1950. Respondent also produced the building plan. With all these facts, it is clear that buildin....
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....trates that the only object of said service recipient is to provide various educational facilities to general public and undertake other activities helpful for education. Such sole object of said service recipient justifies that college building constructed by the appellant is to be used for the sole purpose of education and not for any commercial or industrial purposes. Attention is also invited to para 38 of constitution of the said trust which restricts the trust to apply any surplus for any purpose other than object of said service recipient, prevents said service recipient to indulge in any activity other than for the purpose of its educational object. Consequently, building constructed by appellant would never be used, occupied or engaged in any commerce or industry. It is noteworthy to mention that the leviability of service tax would depend primarily upon whether the building or civil structure is "used, or to be used" for commerce or industry. The information about this was gathered from the approved plan of the building. The original approved plan of the building submitted by the appellant clearly proved that the building was to be used for non-commercial purpose. Circula....
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....cular and the judgments we are of the clear view that construction of a building for use as hospital by a charitable organization does not fall under the category of 'commercial or industrial construction'. Therefore, demand confirmed in this respect is set aside. 15. As regard the issue of GTA service provided for construction of building of Tata Consultancy Service in the SEZ, we refer to Section 26 of the SEZ Act, 2005 which reads as under: "26. Exemptions, drawbacks and concessions to every Developer and entrepreneur 1. Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely:- a. exemption from any duty of customs, under the Customs Act, 1962 (52 of 1962) or the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or services provided in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur; b. exemption from any duty of customs, under the Customs Act, 1962 (52 of 1962) or the Customs Tariff Act, 1975 (51 of 1975) or any other law for the ....