2022 (2) TMI 200 - AT - Service Tax

Exemption from service tax - Sl.No.12 of Notification No.25/2012 ST - MANIT is an Educational Institute of National Importance - governmental authority or not - HELD THAT - The issue is no longer res integra and the same has been decided by the Hon‟ble Patna High Court in the case of SHAPOORJI PALOONJI COMPANY PVT. LTD. VERSUS COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX AND OTHERS 2016 (3) TMI 832 - PATNA HIGH COURT , wherein Shapoorji Paloonji Co. constructed the buildings for the IIT, Patna. The Hon'ble High Court held that the Governmental Authority as defined under the said notification, wherein, if an institute or body is set up by an Act of Parliament or State Legislature, then the other conditions i.e. 90% or more participation by way of equity or control by Government will not be applicable - The facts herein are similar to the facts in the case of Shapoorji Paloonji Company Pvt. Ltd. The substitution vide Notification No.02/2014-ST dated 30.01.2014, of the definition of Governmental Authority‟ is made, the same shall have the retrospective effect, as substitution relates to the date of original notification as per the Rules of the Interpretation - the Commissioner (Appeals) has erred in holding that substituted definition of Governmental Authority shall not have the retrospective effect. The impugned order is set aside, so far it confirms the demand and penalty for the period April, 2013 to Jan./June, 2014 - Appeal allowed.

Summary

Issues:
1. Service tax demand for repair and maintenance services provided by the appellant.
2. Exemption eligibility of the appellant as a governmental authority.
3. Applicability of penalty under Section 78 and Section 77.

Service Tax Demand Issue:
The appellant, engaged in providing taxable services, faced a service tax demand for repair and maintenance services, including white washing for a specific institute. The demand was proposed for the period 2013-2014 up to 30.06.2017, invoking an extended period of limitation. The show cause notice was contested, leading to the confirmation of the demand, interest, and penalties under Section 78 and Section 77(1).

Exemption Eligibility as Governmental Authority:
The appellant argued before the Commissioner (Appeals) that the institute where services were provided is an Educational Institute of National Importance controlled by the Central Government. The Commissioner (Appeals) held that the appellant was entitled to exemption under Notification No.25/2012-ST post an amendment in the definition of Government Authority. The Commissioner found that the institute did not meet the criteria of a governmental authority before 30.01.2014, confirming a demand for a specific period and dropping the remaining demand.

Penalty Applicability Issue:
The Commissioner (Appeals) confirmed penalties under Section 78 and Section 77. However, the Tribunal, after considering the contentions and a relevant High Court judgment, held that the substituted definition of "Governmental Authority" with retrospective effect was applicable. Consequently, the Tribunal allowed the appeal, setting aside the demand and penalty for a specific period and granting the appellant consequential benefits as per the law.

This detailed analysis of the judgment addresses the issues of service tax demand, exemption eligibility as a governmental authority, and the applicability of penalties under Section 78 and Section 77, providing a comprehensive overview of the legal proceedings and outcomes.