TaxTMI 
TaxTMI 
2026 (5) TMI 583
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....y is liable to pay service tax and whether demand confirmed by Adjudication authority by invoking the extended period of limitation is sustainable. 2. Alleging that the appellant short paid service tax for the services provided by them, proceedings were initiated and show cause notice was issued on 29.09.2016 demanding service tax for the period from 2011-12 to 2014-15. Thereafter, adjudication authority as per the impugned order dated 22.03.2018 confirmed the demand with interest and imposed penalty also. Aggrieved by said order, present appeal is filed. 3. When the appeal came up for hearing, learned Counsel submits that Appellant being an entity established by Government of Kerala for training in the field of local governance and t....
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....d state government is not service provider. Exactly same logic is applicable to state sponsored scheme. The state government shall not be treated as service recipient and the appellant shall not be treated as service provider. As clarified by CBEC, there is no consideration in such a situation. Hence it is not a service at all and the question of service tax does not arise." 4. Learned Counsel further draws our attention to the impugned order and submits that though the Adjudication Authority accepted that no service tax liability in respect of activities under centrally sponsored schemes and it is covered by Circular No. 354/35/2010-TRU dated 30.07.2010 for the period from 01.07.2012, denied the same on the ground that the Circular is n....
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....urther draws our attention to the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 which reads as follows: 39. Services by a governmental authority by way of an activity in relation to any function entrusted to municipality under Article 243W of the Constitution. The phrase used is in relation to any function entrusted to municipality under Article 243W of the Constitution in serial No. 39 of the said notification. On a reading of the provisions of article 243 W given above and entry No. 13 of Twelfth Schedule of the Constitution and serial No. 39 of mega exemption notification No. 25/2012 ST dated 20.6.2012, it is clear that the training services rendered by the appellant are definitely education services cover....
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....tal authority" means an authority or a board or any other body; (i) set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;" (emphasis added) Article 243W of the Constitution of India reads as under:- "243W - Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow- (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and....
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....to establish centres for study and orientating (a) training and instruction (b) research and evaluation and such other activities as may be necessary; Thus, the objective of the institute is to promote study centers for other purpose also, it was for the Appellant to prove that the demand is not covered under said category to confirm demand. 9. Learned Counsel also draws our attention to the certificate dated 15.11.2025 issued by Principal Secretary, Local Self Government where it is stated that the Appellant is established by the State of Kerala for training in the field of Local Governance. Further it is certified that more than 90% control and substantial interest in KILA rest with Government of Kerala, both in te....
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....rticipation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution. Accordingly, Appellant is eligible for the benefit of Notification No. 25/2012-ST dated 20.06.2012 and demand confirmed by the impugned order is unsustainable. 12. Accordingly, impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law. (Order pronounced in open court on 08.05.2026) ============= Document 1 The details of receipts on which service tax demand has been raised for FY 2013-14 is given below: Year below: 2013-14 Particulars 01.04.2013 to 30.09.2013 01.10.2013 to 31.01.2014 01-02-2014 to 31- 03-2014 Total Grant from State Government ....