2019 (5) TMI 1486 - AT - Service Tax

Refund of service tax - Works Contract Service and Manpower Service - reverse charge mechanism - HELD THAT - As per Rule 2(1)(d) of Central Excise Rules, 1994 read with Notification No.30/2012-ST dated 20.06.2012, if manpower supply and works contract services are provided by an individual or hindu undivided family or partnership firm then the recipient has to pay service tax provided that the recipient is business entity registered as Body Corporate. It is very clear that all the grounds raised by Revenue have been dealt with by learned Commissioner (Appeals) and Revenue could not raise any ground to counter the findings of learned Commissioner (Appeals) - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund claim of service tax under reverse charge mechanism.
2. Determination of whether the appellant is a business entity.
3. Interpretation of relevant legal provisions and case laws.

Analysis:
1. The judgment pertains to a refund claim of service tax under reverse charge mechanism. The respondent, an Indian Institute of Technology, Kanpur, had applied for a refund of service tax paid on 'Works Contract Service and Manpower Service.' The Original Authority rejected the claim, stating that the respondent was liable to pay the service tax. The Commissioner (Appeals) allowed the appeal filed by the respondent, leading to the Revenue appealing to the Tribunal.

2. The key issue was whether the appellant, IIT Kanpur, qualified as a business entity. The Tribunal analyzed the definition of a business entity as per Section 65B(17) of the Finance Act, 1994, which refers to a person carrying out activities related to industry, commerce, or business. The Tribunal also considered relevant case laws, distinguishing the definition of 'industry' in different contexts. The Tribunal concluded that IIT Kanpur, established under the Institutes of Technology Act, 1961, primarily focused on providing instruction and research in engineering, technology, sciences, and arts, and did not fall under the definition of a business entity.

3. The Tribunal further examined the definition of a body corporate under Section 65(14) of the Act and the Companies Act, 1956. It was noted that IIT Kanpur did not meet the criteria to be classified as a body corporate. The Tribunal referenced a judgment from the High Court of Patna in a different case involving service tax exemption for services provided to IIT, emphasizing the distinction in the context of governmental authority. Based on the detailed analysis of legal provisions, case laws, and the specific nature of IIT Kanpur's activities, the Tribunal upheld the decision of the Commissioner (Appeals) and rejected the appeal filed by the Revenue.

Overall, the judgment provides a thorough analysis of the issues involved, including the interpretation of legal provisions and case laws to determine the liability of the appellant for service tax under reverse charge mechanism, ultimately ruling in favor of the respondent, IIT Kanpur.