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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 ..... ected the petitioner by providing an opportunity to produce the relevant documentary evidence regarding the educational institutions to whom, the petitioner provided construction service and thereafter, he could have decided the issue. Petitioner were under bona fide impression that the service tax on the constructions provided to the educational institutions is exempted as per Circular No.80, dated 17.9.2004 and that they only constructed classrooms, hostels, etc., which are primarily used for imparting education and not used either for commerce or industry and without deciding the issue that whether the construction provided by the petitioner to the educational institutions are used or to be used for commerce or industry in order to extend the benefit of exemption under the above said Circular, the first respondent has erroneously dealt with the issue holding that the educational institution to which the petitioner provided constructions, itself is an industry and running for profit - impugned proceedings, dated 28.11.2014 of the first respondent are hereby set aside and the matter is remitted back to the first respondent to deal with the issue in terms of the exemption Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On receipt of reply, the respondents provided personal hearing to the petitioner, wherein, the various submissions along with relevant citations were made on behalf of the petitioner. Having considered the same, on a detailed discussion, the first respondent came to the conclusion that the construction activities undertaken by the petitioner would be squarely covered under the definition of Clause 2(b) of the definition under Section 65(105)(zzzza) of the Finance Act, 1994 as a civil construction primarily for commerce or industry and hence, the petitioner is liable to pay the service tax. The first respondent also concluded that the petitioner has suppressed relevant facts relating to assessment of tax and accordingly, imposed interest and penalty. Accordingly, the first respondent has passed the impugned order. 4. Challenging the impugned proceedings, the learned counsel appearing for the petitioner would contend that by virtue of the Circular No.80/10/2004-ST, dated 17.9.2004, the service tax on the construction of educational institutions and hospitals is exempted since said construction is non-commercial and as such, the petitioner had continuously filed ST-3 Returns for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation without any profit and if the institutions are earning profits, they cannot be construed as non-commercial, but only as industries. In such case, the exemption Circular cannot be made applicable. In the present case, after following the decision of the Hon ble Apex Court in Bangalore Water Supply Sewerage Board versus R.Rajappa others reported in 1978 AIR 548 for the proposition of law that educational institution, viz., a university, a college, a school or research institute is, an industry and not charitable and also following other relevant decisions, the first respondent has categorically held as under in para 20 and 21: 20. The above decisions of various judicial for a clearly points to the fact that the educational institutions per se cannot be held as non-commercial or non-profit industries. In this regard, I would like to emphasize on the fact that the quantum of fees collected by the private institutions alone (as compared to similar Government Institutions) is not a factor alone in determining a institution as commercial or profit oriented. The collection of higher fees could be for the reasons that they may be providing better infrastructural support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thereby the exemption under the said Circular, dated 17.9.2004 cannot be availed by the petitioner. Though the first respondent has categorically mentioned in para 20 that any claim on non-profit and non-commercial nature of institutions has to be substantiated only by way of establishing the credentials of such institutions and not by merely stating that they are in the field of education, however, considering the fact that the petitioner failed to provide any such evidence, the first respondent came to the conclusion that the educational institutions to whom the petitioner provided construction services, are making systematic profits and their sole aim is not to serve the poor section of the public and accordingly he rejected the claim of the petitioner. 9. Admittedly, as on the date of passing the impugned proceedings, there was no evidence available before the first respondent to hold that whether the educational institutions to whom the petitioner provided construction services, are profit oriented or whether they are established solely for educational purpose without any profit, etc., While that being so, in the absence of any evidence, there is no justification on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they only constructed classrooms, hostels, etc., which are primarily used for imparting education and not used either for commerce or industry and without deciding the issue that whether the construction provided by the petitioner to the educational institutions are used or to be used for commerce or industry in order to extend the benefit of exemption under the above said Circular, the first respondent has erroneously dealt with the issue holding that the educational institution to which the petitioner provided constructions, itself is an industry and running for profit. I find considerable force in the said contention made on behalf of the petitioner. It is also stated by the petitioner that if at all the first respondent suspected the usage of the buildings or civil structures provided by the petitioner were meant to use or to be used for the purpose of commerce or industry, he could have very well called for records from the Income tax Department for verification and that the petitioner had already given the complete details of the educational institutions for whom they provided constructions. 11. For the foregoing reasons, I am of the considered view that the impugned p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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