2024 (6) TMI 16 - AT - Service Tax

Levy of service tax on construction services for educational institutions - Sustainability of the demand for different periods - imposition of penalties - Whether demand raised for the period prior to 01.07.2012 and demand for the period after 01.07.2012 upto 31.03.2013 sustainable or not? - Period prior to 01.07.2012 - HELD THAT - The Board vide its Circular dated 17.09.2004 had clarified that construction for educational purposes does not fall under commercial constructions and therefore is exempted from levy of service tax. The Tribunal in the case of M/s. Vijayadeepa Constructions Private Limited (supra) had considered the very same issue and set aside the demand for the period prior to 01.07.2012. Thus, we are of the opinion that the demand for the period up to 01.07.2012 cannot sustain and requires to be set aside. Ordered accordingly. Period from 01.07.2012 to 31.03.2013 - The appellant having paid the amount before passing of the adjudication order and also having co-operated with the Department in providing all details, we find that there has been no suppression of facts on the part of the appellant. Even in the Show Cause Notice, it is merely alleged that the appellant has suppressed the fact of providing the taxable service. The said allegation is erroneous for the reason that the appellant has taken registration under WCS on 11.02.2013. Apart from stating that the appellant is required to voluntarily pay the service tax and disclose their value by filing ST-3 returns, there is no other positive act or willful suppression brought out by the Department. Thus, the appellant has paid the entire service tax before passing of the adjudication order, we are of the opinion that the penalty imposed u/s 78 alone requires to be set aside. The penalty u/s 77 is upheld. The order of appropriation of the amount already paid by the appellant is also sustained. The impugned order was modified to set aside the demand, interest, and penalties for the period prior to 01.07.2012. The demand for the subsequent period was upheld, with the penalty u/s 78 being entirely set aside. The penalty u/s 77 was maintained. The appeal was partly allowed with consequential reliefs, if any, as per law.

Summary

Issues Involved:
The judgment involves determining the levy of service tax on construction services provided by the appellant for educational institutions, the sustainability of the demand for different periods, and the imposition of penalties.

Levy of Service Tax for Period Prior to 01.07.2012:
The appellant contended that construction services for educational institutions are exempt from service tax as per Circular No. 80/10/2004. Referring to a previous case, it was argued that demand for this period cannot be sustained. The Tribunal agreed, citing the Circular and setting aside the demand for this period.

Demand for Period from 01.07.2012 to 31.03.2013:
Regarding the demand for this period, the appellant did not contest it on merits but challenged the penalties imposed. The appellant had paid a significant portion of the demand before the Show Cause Notice. The Tribunal found no suppression of facts by the appellant and set aside the penalty under Section 78, upholding the penalty under Section 77.

Penalties Imposed:
The Department argued that penalties were justified due to non-payment of service tax coming to light through their verification. However, the Tribunal found that the appellant had cooperated and paid the service tax before the adjudication order, leading to the setting aside of the penalty under Section 78 while upholding the penalty under Section 77.

Conclusion:
The impugned order was modified to set aside the demand, interest, and penalties for the period prior to 01.07.2012. The demand for the subsequent period was upheld, with the penalty under Section 78 being entirely set aside. The penalty under Section 77 was maintained. The appeal was partly allowed with consequential reliefs, if any, as per law.