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2021 (9) TMI 516 - HC - Service TaxExempt services or not - educational institutions or not - whether the services rendered by the petitioner university by granting affiliation and its allied activities and also by providing shelter in their campus to the service providers like Bank, Post Office, or catering etc., directly beneficial to the students, staff and faculty of the university, are exempted services within the meaning of Section 66-D of the Finance Act and also under the Mega Exemption Notification of the year 2012 as amended from time to time? HELD THAT - This Court is of the concerned view that, that kind of narrow or pedantic interpretation cannot be possible in the words conduct of examination . The reason being, the very prime function of the petitioner university under the statute, under which it has been created, under Section 4(4) of the University Act, which has been quoted herein above, is to hold examinations and to confer degrees, titles, diplomas and other academic distinctions. Therefore, holding or conducting an examination is primarily a job of the university and the colleges affiliated to the university are only facilitators. Therefore, examinations are not conducted directly by the colleges, it is being conducted by the university, but the facilitator is the college. Therefore, the word conduct of examination by such institution means, conduct of examination by the university and the college and not by the college alone. The examination is the examination of the university, for which, facilitation is given by the college, wherein the examinations are conducted and ultimately, valuation is to be done by the university and marks are awarded and degree is conferred by the university. It is the university, where, the facilitator is the college, where, the examination is being taken place and therefore, the word conduct of examination , cannot have such a narrow and pedantic interpretation. Throughout the regime between 2012 and 2017, the educational institution had been provided with the exemption as has been stated in various provisions of the Act as well as the mega notification, followed by the amended notification and during all these periods, these institutions including the universities can very well enjoy the exemption. Accordingly, the stand taken by the revenue for levying service tax for the services being provided by the petitioner university cannot be approved. Levy of service tax - services such as renting of immovable property for the purpose of bank, post office, canteen etc. - HELD THAT - These are all allied services of education which are also included in the purview of educational services, in view of clause 9, which has given an expanded meaning of educational services which includes the services to be provided not only to the students, but also faculty and staff. In this category, the faculty and staff of the university are getting whatsoever services by way of transportation, boarding and lodging etc., are also to be included in the meaning educational services being provided by the educational institutions ie., the petitioner herein which can also be exempted from the purview of service tax - the demand made for levying service tax on the services provided by the petitioner institution under the heading renting of immovable property also, in the considered view of this Court, cannot be sustained - the assessment and demand made by the respondent, in the considered view of this Court, is untenable. The petitioner educational institution ie., the university cannot be assessed for demanding any service tax for the services of education provided by them, which includes affiliation or other services provided for the students, faculty as well as the staff of the university - petition allowed.
Issues Involved:
1. Whether the services rendered by the petitioner university by granting affiliation and its allied activities are exempted services within the meaning of Section 66-D of the Finance Act and the Mega Exemption Notification. 2. Whether the services related to renting immovable property for purposes like bank, post office, and canteen are exempted from service tax. Issue-Wise Detailed Analysis: 1. Exemption of Affiliation Services: - The petitioner university, established under the Madurai Kamaraj University Act, 1965, functions as an affiliating university, holding examinations and conferring degrees. - The Finance Act, 1994, introduced service tax, which was expanded over time. From 2012, Section 65-B(44) defined "service," and Section 66-B imposed a 12% tax on services except those in the negative list under Section 66-D. - Clause (l) of Section 66-D (effective from 01.07.2012 to 13.05.2016) exempted educational services like pre-school to higher secondary education, education as part of a recognized curriculum, and approved vocational courses. - The Mega Exemption Notification (20.06.2012) and subsequent amendments (including Notification No.9/16) further clarified exemptions for educational institutions. - The primary function of the university includes granting affiliations and conducting examinations, integral to imparting education. - The court found that services related to affiliation and examination are part of educational services, exempt from service tax under Section 66-D and the Mega Exemption Notification. - The court rejected the revenue's argument that the university does not directly impart education, emphasizing the expanded meaning of educational services to include faculty and staff services. 2. Renting of Immovable Property: - The university provides services like renting space for banks, post offices, and canteens within its campus, which benefit students, faculty, and staff. - Clause 9 of the Mega Exemption Notification includes services provided by educational institutions to their students, faculty, and staff, such as transportation, catering, and housekeeping. - The court held that these services are part of the educational services and thus exempt from service tax. - The court disagreed with the revenue's reliance on the Advance Ruling Authority's narrow interpretation, asserting that the expanded meaning of educational services includes these allied activities. Conclusion: - The court concluded that the entire demand for service tax by the respondent revenue on the petitioner university's services, including affiliation and renting of immovable property, is unlawful and against the statutory provisions. - The impugned order was set aside, and the writ petition was allowed, exempting the petitioner university from service tax for the period in question.
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