2015 (12) TMI 20 - AT - Service Tax

Waiver of pre deposit - Abatement claim - Commercial or Industrial Construction Service - Held that - Even CICS is a limb of works contract service and the service tax liability under the compositional scheme under works contract service and with 67% abatement under CICS is approximately the same. We, however, are in agreement with the appellant that even when the value of free supplies was not included in the assessment value, it was entitled to 67% abatement in the light of the judgement in the case of Bhayana Builders (P) Ltd. & Ors. vs. CST, Delhi & Ors 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) - activities of charitable institutions cannot be said to be non-commercial in nature even if the organisation which runs them is the declared to be charitable under Income Tax Act. The appellant cited the judgement in the case of Administrative Staff College of India Vs. CCE, Hyderabad 2008 (8) TMI 194 - CESTAT, BANGALORE . Apart from the fact that the said judgement is with regard to commercial training or coaching service, that judgement no longer represents good law in the light of the CESTAT Larger Bench judgement in the case of Great Lakes Institute of Management Ltd. Vs. CST, Chennai 2013 (10) TMI 433 - CESTAT NEW DELHI - LB . - appellant would be prima facie eligible for 67% abatement, we order the pre-deposit of ₹ 1.8 crores along with proportioned interest within 6 weeks - Partial stay granted.

Summary

Issues:
1. Service tax demand under Commercial or Industrial Construction Service (CICS)
2. Denial of 67% abatement on the ground of free supplies not included in assessable value
3. Classification of construction activity for educational institutions run by charitable organization under CICS

Analysis:

1. The appellant filed a stay application and appeal against the Order-in-Original confirming a service tax demand under Commercial or Industrial Construction Service (CICS). The appellant argued that the service rendered should fall under works contract service. The Tribunal observed that CICS is a part of works contract service, and the service tax liability under the compositional scheme is similar with 67% abatement. The Tribunal agreed with the appellant that despite free supplies not being included in the assessable value, the appellant was entitled to 67% abatement based on a previous judgment. Regarding the construction activity for educational institutions run by a charitable organization, the Tribunal noted that even if the organization is charitable under the Income Tax Act, the activities of the institutions cannot be considered non-commercial. The Tribunal referred to a previous judgment but stated that it no longer represents good law based on a CESTAT Larger Bench judgment.

2. The Tribunal ordered a pre-deposit of a specified amount along with interest within a set timeframe. Compliance was required to be reported by a specific date, and subject to such compliance, recovery of the remaining adjudicated liabilities was stayed during the appeal's pendency. The Tribunal warned that in case of default, the appeal would stand dismissed for failure of pre-deposit.