2013 (3) TMI 250 - AT - Service Tax

Commercial or Industrial Construction Services/Works Contracts Services - appellants have constructed a Boys and Girls Hostel - Held that - Considering the fact that building is constructed as hostel for the residence of students studying in medical institute and there is no allegation that the building is being used for any other purpose the Board Circular No. 80/10/2004-ST, dated 10.9.2004 is applicable to the facts of this case which clarified that such 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 purposes of profit are not taxable being, non-commercial in nature. Thus from the above circular, appellant are not liable to pay service tax - in favour of assessee.

Summary

Issues:
Demand of Service Tax for the period October 2008 to September 2010 under 'Commercial or Industrial Construction Services'/'Works Contracts Services'.

Analysis:
The appellant constructed a Boys and Girls Hostel for an educational institution and paid service tax under works contract services for a specific period. Later, they ceased paying service tax as they believed the construction was not for commercial use. However, show cause notices were issued for demand of service tax, alleging lack of evidence regarding the non-commercial nature of the construction.

The appellant argued that the hostel was not for commercial or industrial purposes, citing a CBEC Board Circular. The Revenue contended that the appellant failed to provide evidence of the construction's use. The Tribunal considered the issue to be narrow and proceeded with the appeal without pre-deposit requirements.

The Tribunal referred to the CBEC Circular which stated that constructions for educational, religious, charitable, health, or philanthropic purposes, not for profit, are non-taxable. Since the hostel was for students of a medical institute and not for commercial use, the Tribunal held that the appellant was not liable for service tax. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

The stay petition was also disposed of accordingly.