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TMI Blog2015 (11) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... construction services to various educational institutions, viz., Sri Krishna College, SRM Institutions, etc., and also to hospitals, viz., Ganga Medical Centre of Ganga Hospital, but they have not discharged service tax liability on the said services. According to the respondents, the above services provided by the petitioner are taxable and accordingly, the quantification of duty liability was worked out in terms of provisions of Rule 2A of the Service Tax (Determination of Value) Rules, 2006 for the period from October, 2008 to October 2013 and arrived at Rs. 2,27,24,001/- towards service tax payable by the petitioner. Accordingly, a show cause notice, dated 21.4.2014 was issued to the petitioner. Pursuant to the same, the petitioner submitted their reply on 5.6.2014, inter alia, stating that for the construction of educational institutions, service tax is exempted as per Circular No.80/10/2004 ST, dated 17.9.2004 upto 30.6.2012 and they have been paying service tax on construction services provided to educational institutions from 1.7.2012. It is also stated that the total construction of education institutions was only Rs. 19,54,93,374/- and not Rs. 22,16,55,493/- as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institutions to whom the petitioner provided the construction service, have been providing educational services and not making systematic profits and thereby, the first respondent has rightly construed that the educational institutions to whom the petitioner provided the construction service, are commercial and hence, the above said Circular does not apply to the case of the petitioner and accordingly, imposed the service tax. Hence, the learned counsel sought for dismissal of the writ petition. 6. Heard the learned counsel appearing for the petitioner and the respondents and perused the entire records. 7. A perusal of the impugned order, it appears that the first respondent has taken laborious efforts in order to make the petitioner ineligible to claim exemption of service tax in respect of constructions provided by them to the educational institutions by virtue of the Circular, dated 17.9.2004. It is not in dispute that the said Circular, dated 17.9.2004 provides exemption of service tax in respect of constructions which are for the use of organization or institutions being established solely for educational, religious, charitable, etc., However, according to the first respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the poor section of the public. Hence, I reject the claim that the educational services provided by GSET would be non-commercial even when it is provided by charging fees from the beneficiaries." 8. It is pertinent to note that the petitioner has been claiming exemption from service tax towards the constructions provided for educational institutions and hospitals from October 2008 to October 2013 by filing ST-3 returns, which were also accepted by the department. However, in the year 2014, during the audit inspection, it was noticed that the petitioner provided construction services to various educational institutions, which according to the first respondent, had been making profits and that would be construed as commercial and thereby, the exemption claimed by the petitioner under Circular No.80, dated 17.9.2004 cannot be extended. Accordingly, a notice, dated 21.04.2014 has been issued to the petitioner and thereafter, ultimately, the impugned proceedings were issued. It is to be noted that the first respondent, by relying upon the ratio laid down by the Apex Court in Bangalore Water Supply case, he came to the conclusion that the educational institution is an industry and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o decided in the above said decision by the Hon'ble Apex Court regarding the definition industry for the purpose of settling the industrial disputes, cannot be applied to the case on hand as the present subject matter relates to Finance Act, under which, the Circular dated 17.9.2004 has been issued pertaining to the exemption of Service Tax in respect of construction services. Even assuming that the educational institution is an industry, it does not take away the benefit of exemption provided under the said Circular, if it is established that the constructions provided by the petitioner are used or to be used either not for commerce or not for industry. Therefore, the analysis given by the first respondent that the educational institutions to whom the petitioner provided are profit earning concerns and cannot be construed as non-commercial and thereby, they would be fallen within the ambit of construction of new building primarily for the purpose of commerce or industry under Section 65(105)(ii)(b) of the Finance Act which defined , in my opinion, is fallacious and cannot be tenable. 10. In fact, the consistent version of the petitioner is that they were under bona fide impress ..... X X X X Extracts X X X X X X X X Extracts X X X X
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