TaxTMI 
TaxTMI 
2024 (7) TMI 1168
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (ii) Sri Venkateshwara Educational Charitable Trust - Letter dt. 11.11.2008 (iii) The Bhavani Educational Service Trust - Order dt. 10.12.2008 (iii) Nandha Engineering College - Nandha Educational Trust dt. 30.4.2009 (iv) K. Ramankrishnan Health & Educational Trust - work order dt. 7.1.2012 2. The Department was of the view that the construction activities carried out by the appellant would fall within the definition of 'Commercial or Industrial Construction Services' as defined under Section 65 (25b) of the Finance Act, 1994. Show cause notice dt. 19.3.2013 was issued for the period October 2007 to March 2012 demanding service tax under CICS along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Aggrieved by such order, the appellant has filed the present appeal. 3. Ld. Consultant Shri N.K.Bharath Kumar appeared and argued for the appellant. It is submitted that the construction works carried out by the appellant are for educational institutions. These construction activities do not fall under the category of 'Commercial Construction Servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lved is from October 2007 to March 2012 and the show cause notice has been issued on 19.3.2013. Part of the demand would fall within the extended period. When audit was conducted on July 21st to 24th in 2008 all the documents were verified by the department and no objection was raised in this regard to the non-payment of service tax for construction of educational institutions. Since these educational institutions are provided for non-profit organizations, the appellant were under bonafide belief that they were not liable to pay service tax as clarified by the Board circular. It is submitted that there is no positive act alleged against the appellant for suppressing facts with intent to evade payment of service tax. There are no grounds for invoking the extended period and the SCN therefore is time-barred. The issue as to whether the services provided to educational institutions is subject to levy of service tax is also interpretational in nature as there were several litigations pending before various forums. It is prayed that the appeal may be allowed. 4. Ld. A.R Shri M. Selvakumar appeared and argued for the Department. The findings in the impugned order were reiterated. 5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial nature. The Department vide Circular No.80/10/2004-ST dt. 17.09.2004 has clarified that the constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purpose of profit are not taxable being non-commercial in nature. Relevant part of the circular reads as under : "13. Construction services (commercial and industrial buildings or civil structures) : 13.1 Services provided by a commercial concern in relation to construction, repairs, alteration or restoration of such buildings, civil structures or parts thereof which are used, occupied or engaged for the purposes of commerce and industry are covered under this new levy. In this case the service is essentially provided to a person who gets such constructions etc. done, by a building or civil contractor. Estate builders who construct buildings/civil structures for themselves (for their own use, renting it out or for selling it subsequently) are not taxable service providers. However, if such real estate owners hire contractor/contractors, the payment made to such contractor would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as withdrawn the said circular dt. 17.09.2004 pursuant to the issuance of Master Circular No.96/7/2007-ST dt. 23.08.2007. The Ld. Counsel has submitted that as per the Master Circular dt. 10.05.2007, though several circulars were withdrawn, the circular dt. 17.09.2004 was not withdrawn by the Department and is in force during the disputed period. The relevant part of the Master Circular is reproduced as under : "3. Taking into account the recommendations made in the report submitted by Shri T.R. Rustagi, views/comments/suggestions received from the trade and industry associations, the departmental officers and all material facts, it has been decided that certain service tax circulars/clarifications/instructions which were previously issued with some objectives, but which have since then lost their relevance or have become anachronistic due to changes in law, procedures, etc., should be withdrawn. Accordingly, the following circulars/clarifications/instructions stand withdrawn with immediate effect, - Sl. No. Circular No./F. No. Date 1 1/1/94-ST 29-6-1994 2 2/2/94-ST 8-7-1994 3 4/4/94-ST 6-9-1994 4 5/5/94-ST 11-10-1994 5 6/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or not. The said letter by the Coimbatore Builders and Contractors Association as well as the reply by the Coimbatore Commissionerate is as under : Query : 1. Whether the construction of schools, Colleges, Hospitals and Charitable institutions, was liable to Service Tax as the same were not primarily for Commerce or Industry. 2. If the Circular No.80/10/2004 dated 10.09.2004, which clarified what type of construction are not to be treated as Commercial, is to be treated as withdrawn, is there an alternate Circular mentioning that construction of Schools, Colleges, Hospitals and Charitable Institutions are not exempted. 3. Having informed the trade in 2008 vide Circular 98/1/2008 dated 04/01/2008 that existing pattern of payment of Service Tax for ongoing projects as on 01.06.2007 should only be under abatement method under Notn.01/2006 and not under works contract, can the Department now demand differential Service tax even for the ongoing projects on 01/06/2007 under Works Contract. 4. When Service tax has been discharged by the builders availing Notification 1/2006 and tax paid on the abated portion wherever material is used, is it cor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t taxable being non-commercial in nature. It is also not in dispute that claim of the respondent before the concerned authority seeking refund of the above said amount was based on the above circular dated 17-9-2004 on the ground that the services are rendered for a non-profit organization. The department is also not denying that services rendered by the respondent by putting up constructions of several buildings stated above to the trust, which is a non-profit organization, hence, a non-profit service is not taxable." 14. In the case of Gujarat Adani Institute of Medical Sciences Vs CCE & ST Rajkot vide Final Order No.A/11309-11310/2023 dated 22.06.2023, the Tribunal considered the very same issue as to whether the demand of service tax raised on construction of educational institutions is sustainable or not. Relevant paras read as under : "5.3 We also find that in view of the various documentary evidence and certificates and registrations of the Appellants and analysis thereof and also considering the observations of the ld. Commissioner (Appeals) on this, there is no doubt that building constructed by the Contractor is medical college building. From the Resolut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of Commissioner of Service Tax Vs. S.M. Sai Construction - 2016 (42) STR 716 wherein the service recipient was charitable trust registered under the Bombay Public Trust Act, 1950.The Tribunal Held that the building constructed was not commercial construction and therefore, Service Tax paid by the recipient was refundable. In an another identical case of Institute of Banking Personal Selection Vs. Commissioner of Service Tax - 2007 (8) STR 579,it was held that an organization does not declare dividend or distribute surplus/profits to its shareholders, trustees and /or members but ploughs back the surplus for the purpose of an object of the organization would be considered as charitable organization. Accordingly, Service Tax would not be charged. It is further held that merely charging of fees will not make position that the appellant institute is not a non-commercial concern. 5.5. In view of the above judgment it is settled that merely by charging fees or higher fees an institution which otherwise, belongs to a Charitable Trust cannot lose its identity as non-commercial entity. 5.6 We note that C.B.E. & C. had issued Circular No. 80/10/2004-S.T., dated 17-9....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion clearly covers the case of the appellant post 1-7-2012 as it is undisputed that appellant is registered with the income tax authorities under Section 12AA as a charitable institutions for the period pre and post 1-7-2012. The exemption granted by Notification No. 25/2012-S.T. (13)(c) would apply in full force. Accordingly, the demand of the service tax on the services rendered of works contract services to the religious institution does not survive and are liable to be set aside as we do so. 10. As regards demands raised on the buildings constructed for C-DAC, NFC and APHMHIDC, we find from the hand-outs given today by the Learned Counsel as well as produced before the adjudicating authority, the APHMHIDC has been stated to be engaged in creating infrastructure facilities of accommodation for medical institutions and quarters, and maintenance of hospital buildings, procurement and distribution of drugs, surgical and consumables and equipment and for storage of these items and that the said APHMHIDC is functioning as no profit and no loss basis. The said hand-out also specifically states that it is an enterprise of Govt. of Andhra Pradesh. On perusal of the profile of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is having pan India presence, operating in various campuses, it has to be considered as an educational institution, as per the ratio of the decision of the Tribunal in the case of Vij Construction Pvt. Ltd. (supra). Accordingly, the service tax liability on the construction of buildings for ICFAI Bangalore, Jaipur and Hyderabad for the period pre and post 1-7-2012 is unsustainable and liable to be set aside and we do so. 12. Learned AR has placed reliance on the judgment of the Hon'ble High Court of A.P. and Hyderabad in the case of Tirumala Tirupathi Devasthanams v. Superintendent of Customs, Central Excise & Service Tax, Tirupathi [2013 (30) S.T.R. 27 (A.P.)] to state that the guest houses which are constructed for religious institutions and charitable institutions are liable to tax. We find that the said judgment was delivered by the Hon'ble High Court on the facts of that case inasmuch there the Hon'ble High Court was considering in a writ challenge to a letter issued by the departmental authorities to TTDC for registering themselves as providers of accommodation services. It is to be seen that the Govt. of India by issuing Notification No. 25/2012-S.T. (Sl. No. 13(c)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses, the levy of service tax is not attracted. We, therefore, find that the building having been used for educational purpose and being non-commercial purpose, the said construction activity cannot be subject to levy of service tax during the disputed period." 17. In view of the above discussions, we find that the demand of service tax under WCS for the disputed period for construction of educational institutions cannot sustain. The issue on merits is answered in favour of the appellant and against the Revenue. 18. The Ld. Counsel has argued on the ground of limitation. From the records, it is seen that the entire figures and details for raising the demand is taken from the accounts maintained by the appellant. Further the appellant has discharged appropriate service tax in regard to all other construction services. The appellant had not discharged service tax for constructions of educational institutions on a bonafide belief and also taking note of the clarifications issued by the Board as per circular dt. 17.09.2004. There is no positive act of suppression established by the department against the appellant. The issue is also interpretational in nature as there ....