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TMI Blog2024 (6) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... F C. EX., NAGPUR [ 2006 (3) TMI 141 - SUPREME COURT] , although rendered in the case of classification under the Central Excise Act is also relevant for classification of a service under the FA 1994. Interpretation of phrase primarily for the purposes of commerce or industry - HELD THAT:- The statutory definition of a service given for a particular activity (commercial training or coaching) cannot be taken to understand the term commerce or industry used for another service (WCS) when no ambiguity is involved. As a general principle of interpretation, where the words of a statutory provision are plain, and unambiguous, the intention of the Legislature is to be gathered from the language of the provision itself. The term commerce or industry are commonly understood terms and do not require the aid of another definition from the statute to gather its intention. Commercial activities, relate to activities having profit as the primary aim - The department has not discharged the initial burden in establishing chargeability of the service falling under WCS. Merely because the institutions are collecting a fee will not make the institution primarily for the purposes of commerce or industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just because some amount is collected they will not cease to be non-profit and become commercial in nature. He placed reliance on the following judgments in this regard. a. MCSARA Constructions Vs. The Commissioner of Central Excise, Velammal Education Trust 2021 (3) TMI 1026 Madras High Court b. H. Kannan, Prop. Of Unikans Vs. CCE, Madurai Vice Versa 2018 (5) TMI 837 CESTAT Chennai c. M/s. SRM Engineering Construction Ltd. Vs. Commissioner of Service Tax, Chennai II 2018 (2) TMI 321 CESTAT Chennai d. P. Mariappan Sons vs. CCE, Madurai 2019 (2) TMI 596 CESTAT Chennai He also placed reliance on CBEC Circular No.80/10/2004-ST dated 17/09/2004 wherein it was clarified that buildings meant for educational institution cannot be considered as commerce or industry. He further stated that the SCN was issued beyond 18 months and hence the entire demand is beyond normal period. There is nothing to show suppression of fact, much less with an intention to evade tax, as alleged in the SCN other than to merely state that without audit of the Unit the issue would not have come to light. The issue is prone to interpretation as, there was a circular which states that educational institution cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the activity undertaken by the appellant under Works Contract Service (WCS) as alleged by Revenue. The service was introduced and leviable to Service Tax with effect from 01/06/2007. Section 65(105)(zzzza) of the FA 1994, pertaining to WCS, is reproduced below; Any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation. - For the purposes of this sub-clause, works contract means a contract wherein, - (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, - (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether prefabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercialize in Webster's Third New International Dictionary means: to engage in conduct, practice, or make use of for profit-seeking purposes as distinguished from participation, practice, or use for spiritual or recreational purposes or for other non-pecuniary satisfactions . (emphasis added) 10. Education institutions whether in the private sector or run by Government, other than purely charitable institutions, collect fees from its students. The fact that this collection of fees creates a surplus does not lead to the conclusion that the institution ceases to exist for educational purposes and becomes an institution primarily for the purposes of commerce or industry. An education institution for its modernisation, growth and sustenance needs to generate a surplus which it ploughs back to strengthen and sustain its educational activities. The test to be applied is of predominant object of the activity of the institution and it is to be seen whether the institution exists for imparting education or merely to earn profits. One method is to look at the institutions balance sheet and to ascertain whether a bulk of the income/ profit/ surplus has been utilised for non-educational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hy (supra) decided by the Hon ble Madaras High Court leaves open and remands the issue whether the construction provided by the petitioner to the education institutions were meant to be used for academic purposes or for commercial purposes. The judgment of the Tribunal in Harsh Constructions Pvt Ltd (supra) goes against Revenue in as much as at para 5.2 it is held that prima facie the construction of colleges, Government hospitals or open university cannot be said to be commercial or industrial in nature and remands the matter for a final decision. The judgment of the Hon ble Madaras High Court in Mcsara Constructions (supra) is also against Revenue as the Hon ble Court directed the lower authority to examine the matter and render a finding as to whether the service rendered by the petitioner to the respondent is a commercial or industrial service by applying the test laid down by the Honourable Supreme Court in M/S Queen's Educational Society vs Commr. Of Income Tax [AIR 2015 SC 3253 / 2015 (8) SCC 47]. The judgment of the Hon ble Supreme Court is given in the context of section 10(23C)(iiiad) and (vi) of the Income Tax Act. The relevant portion is extracted below; 11. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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