2024 (11) TMI 349 - AT - Service Tax

Commercial or Industrial Construction Service - Hostel Building constructed for GAIMS (Gujarat Adani Institute of Medical Science) being an educational institute - Whether the extended period of limitation can be invoked? - HELD THAT - We find that there is no dispute that the hostel building construction by the appellant is for Gujarat Adani Institute of Medical Science which is admittedly an educational institution. This Tribunal time and again held that construction of new building which is for the purpose of educational institution cannot be considered as commercial or industrial construction service . As well as Hon ble Rajasthan High court in the case of Jatan Constuction Pvt. Ltd. 2018 (8) TMI 629 - RAJASTHAN HIGH COURT the issue in hand stand settled as the construction building of educational institute cannot be termed as commercial or industrial construction service . Accordingly, the service in question is not taxable under the said head. Hence the demand in the present case is not sustainable. The impugned order is set aside. The appeal is allowed.

Summary

Issues Involved:

1. Whether the construction of a hostel building for an educational institution can be taxed under the category of 'Commercial or Industrial Construction Service'.
2. Whether the extended period of limitation can be invoked in the present case.

Issue-wise Analysis:

1. Taxability of Construction for Educational Institutions:

The primary issue was whether the construction of a hostel building for the Gujarat Adani Institute of Medical Science (GAIMS), an educational institution, falls under the category of 'Commercial or Industrial Construction Service' and is thus taxable. The appellant argued that this issue is well-settled, as various judgments have established that construction for educational purposes is not commercial and should not be taxed under this category. The appellant relied on several precedents, including the decisions of the Hon'ble Tribunal and the Hon'ble High Court of Madras in the case of M/s G. Ramamoorthi Construction India Pvt. Ltd., which supported their stance that educational constructions are non-commercial. The Tribunal agreed with the appellant, citing previous rulings that construction of buildings for educational institutions does not constitute 'commercial or industrial construction service'. It referenced cases like N J Devani Builders, Maulana Azad National Institute of Technology, and Jatan Construction Pvt. Ltd., which consistently held that educational buildings are not commercial and therefore not taxable under the said service category. The Tribunal concluded that the service in question is not taxable, and the demand is unsustainable.

2. Invocation of Extended Period of Limitation:

The second issue was whether the extended period of limitation could be invoked. The appellant contended that there was no suppression of facts or intent to evade tax, as they were under a bona fide belief that the construction for educational institutions was not taxable under 'commercial or industrial construction service'. The Tribunal found merit in this argument, noting that the appellant's belief was supported by existing legal precedents and judgments. The Tribunal concluded that there was no justification for invoking the extended period of limitation, as the appellant had not suppressed any facts with the intent to evade tax.

In conclusion, the Tribunal set aside the impugned order, holding that the construction of the hostel building for an educational institution is not taxable under 'Commercial or Industrial Construction Service'. The appeal was allowed, and the demand was deemed unsustainable.