TaxTMI 
TaxTMI 
2025 (12) TMI 559
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....lant is registered under the category of "Commercial or Industrial Construction Service and engaged, inter alia, in construction of buildings and civil structures for various clients, including educational institutions such as schools and colleges. They filed ST-3 returns for the relevant period. 1.3 During scrutiny of ST-3 returns by the Range Officer, it was noticed that while the Appellant had discharged service tax on certain construction contracts, they had not paid service tax on amounts received towards construction of buildings for educational institutions, treating such activities as non-taxable. 1.4 Consequently, the Show Cause Notice No. 12/2013-ST dated 24.10.2013 was issued which was contested by the Appellant, and the adjudicating authority, vide Order-in-Original No. 11/2014 dated 08.12.2014, confirmed as follows: - * Service tax demand of Rs. 1,20,20,608/- with interest and imposed equivalent penalty under Section 78 of the Finance Act, 1994; and also a * Demand of Rs. 1,43,045/- for 2010-11 with interest and equal penalty under Section 78 for short payment. A penalty of Rs 10,000/- was further imposed under Section 77(2) of Finance 1994. ....
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....ed to the appellant. 4.7 It was finally prayed that Hon'ble Tribunal may please allow the appeal and thus render justice. 5.1 Per contra the Ld. AR Ms. O.M. Reena strongly supported the Impugned Order and submitted that educational institutions charging fees are commercial enterprises, as clarified by the Explanation inserted retrospectively in Commercial Training or Coaching Service (Finance Act, 2010). The same logic applies to construction services rendered for such fee-charging institutions. 5.2 She submits further that once Circular 80/10/2004-ST was withdrawn by Master Circular 96/07/2007-ST, the Appellant cannot rely on it. With the withdrawal, the only applicable test is commercial use of the building, which was clearly the case. 5.3 The Appellant never disclosed the nature of these works nor furnished break-ups of taxable vs. exempt services in their ST-3 returns. The Department detected the non-payment only upon detailed verification. Hence, suppression is proved and extended limitation is justified. 5.4 Penalties are correctly imposed because the Appellant is an established, registered assessee well aware of legal requirements and had wrongly availed a....
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....to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. 8.2 The Notification No. 1/2006-ST dated 1.3.2006 provides for 67% abatement for CICS, subject to the condition that the value of goods/materials was included in the gross amount charged. 9. We take up the issues in seriatim 9.1 The impugned issue is primarily about the Taxability of construction services provided to the educational institutions Section 65(25b) defines "Commercial or Industrial Construction Service" to mean, inter alia, construction of a building or civil structure "used or to be used primarily for commerce or industry". The emphasis is thus on the nature of use of the building. 9.2 We find that the impugned Order has placed emphasis on Master Circular No. 96/7/2007-ST dated 23.08.2007 which stated that earlier clarifications on technical issues stand withdrawn and has proceeded as if withdrawal of the circular itself creates taxability. It is trite law that circulars c....
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....e mere assertion that fees is collected is insufficient to classify their buildings as "commercial" within the meaning of Section 65(25b). 9.5 We find that Para 13.2 of CBEC Circular No. 80/10/2004-ST has correctly captured this nuance by clarifying that construction for organisations established solely for educational, religious, charitable, health or philanthropic purposes and not for profit would be non-commercial and hence not liable under CICS. 9.6 In view of the above, the finding of the Adjudicating Authority that construction for educational institutions is "commercial" lacks statutory support, is contrary to binding jurisprudence, and proceeds on an incorrect importation of an Explanation meant for a different service category. The construction activity in the present case is squarely outside the scope of "Commercial or Industrial Construction Service," and the levy fails at the threshold. 9.7 We also observe that the Appellant has relied upon the decision of The Karnataka High Court in CCE (A), Bangalore v. KVR Construction, 2012 (26) S.T.R. 195 (Kar.) which considered the very same Circular and held that construction of buildings for a charitable educational ins....
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.... decisions in Commissioner of C.Ex (Appeals), Bangalore Vs KVR Construction,2012 (26) S.T.R. 195 (Kar.), Gujarat Adani Institute of Medical Sciences Vs CCE & ST Rajkot vide Final Order No.A/11309- 11310/2023 dated 22.06.2023, KMV Projects Ltd. Vs CCE & ST Hyderabad, 2019 (27) G.S.T.L. 388 (Tri.-Hyd.), and this Tribunal decision in Vijayadeepa Constructions Private Ltd. Vs CGST & Central Excise, Coimbatore vide Final Order No.40536/2024 dt. 08.05.2024 and after considering the same, gone on to further hold as under: "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." 22. We find that the said decision has since been followed by this Tribunal in M/s. RGP Construction versus The Commissioner of CGST & Central Excise, Salem, 2024(7) TMI 1168-CESTAT CHENNAI. Therefore, in view of our discussions supra and considering the aforesaid decisions of this Tribunal which are binding on us, we hold that the demand of service tax on the works contract services rendered by the ....