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TMI Blog2024 (7) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... awn and was still in force during the disputed period. The Tribunal held that the demand under CICS cannot sustain in respect of construction services provided for construction of educational institutions. The demand cannot sustain - the impugned order is set aside - Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... y for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams". 3.1 The above definition would show that only constructions which are primarily for commerce or industry would be covered by the above definition. Education Services do not fall under the category commerce or industry. Educational institutions are non-commercial in nature and the services has been carried out for non-profit bodies which are educational and charitable trust. For these reasons, the appellant is not liable to pay service tax. 3.2 The Ld. Consultant relied upon the decision of the Tribunal in the case of R.R. Thulasi Builders (I) Pvt. Ltd. Vs CGST & Central Excise, Salem vide Final Order No.40703/2024 dated 13.06.2024 (Appeal ST/41763/2015). 3.3 The Ld. Consultant argued on the ground of limitation also. It is submitted that the period involved is from October 2007 to March 2012 and the show cause notice has been issued on 19.3.2013. Part of the demand would fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant discussion of the Tribunal in the Final Order No.40703/2024 dt. 13.6.2024 in the case of R.R. Thulasi Builders (I) Pvt. Ltd. (supra) is as under : "7. The issue to be considered is whether the appellant is liable to pay service tax under "Works Contract Service" for the period 01.10.2008 to 30.06.2012 for construction of educational institutions. 8. It is not in dispute that the appellant has discharged service tax in respect of construction services provided for other than educational institutions. The issue in this appeal is only with regard to the demand raised in respect of construction service for educational institutions. The department is of the view that the appellant has to pay service tax for construction service provided to construct educational institutions. It is the case of the department that even though these educational institutions may be constructed and run by charitable organizations, since these educational institutions collect fees of different nature, they are to be treated as constructions of commercial nature. The Department vide Circular No.80/10/2004-ST dt. 17.09.2004 has clarified that the constructions which are for the use of organiza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case such immovable property is treated as a commercial property under the local/municipal laws. 13.4 The definition of service specifically excludes construction of roads, airports, railway, transport terminals, bridge, tunnel, long distance pipelines and dams. In this regard it is clarified that any pipeline other than those running within an industrial and commercial establishment such as a factory, refinery and similar industrial establishments are long distance pipelines. Thus, construction of pipeline running within such an industrial and commercial establishment is within the scope of the levy." The Board in the above circular has explained that when the building is meant only for educational purpose, the levy of service tax is not attracted. The department does not have a case that the educational institutions constructed by appellant are not used principally and solely for providing education. 9. The Ld. A.R has attempted to counter the above circular by stating that the Board has withdrawn the said circular dt. 17.09.2004 pursuant to the issuance of Master Circular No.96/7/2007-ST dt. 23.08.2007. The Ld. Counsel has submitted that as per the Master Circular dt. 10.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Department. 10. When the circular issued by the Board specifically clarified that construction services provided for construction of educational institutions are exempted from levy of service tax we find no reason to hold that these constructions are commercial in nature. 11. It also requires to be stated that the Coimbatore Builders and Contractors Association had addressed to the Chief Commissioner of Central Excise, Coimbatore vide letter dt. 19.06.2013 requesting for clarifications with regard to various construction services. One of the clarifications raised in the said letter was whether the Circular No.80/10/2004-ST dt. 17.09.2004 is to be treated as withdrawn or not. The said letter by the Coimbatore Builders and Contractors Association as well as the reply by the Coimbatore Commissionerate is as under : Query : 1. Whether the construction of schools, Colleges, Hospitals and Charitable institutions, was liable to Service Tax as the same were not primarily for Commerce or Industry. 2. If the Circular No.80/10/2004 dated 10.09.2004, which clarified what type of construction are not to be treated as Commercial, is to be treated as withdrawn, is there an alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of educational institutions is exempt from levy of service tax. Relevant para reads as under : "12. It is an undisputed fact that total amount of Rs. 1,24,38,991/- was paid as service tax under different TR-6 challans between February 2005 and February 2007. It is not in dispute the clarifications issued in the circular dated 17-9-2004 includes the building constructions which are for the use of organizations or institutions being established solely for the educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purpose of profit, are not taxable being non-commercial in nature. It is also not in dispute that claim of the respondent before the concerned authority seeking refund of the above said amount was based on the above circular dated 17-9-2004 on the ground that the services are rendered for a non-profit organization. The department is also not denying that services rendered by the respondent by putting up constructions of several buildings stated above to the trust, which is a non-profit organization, hence, a non-profit service is not taxable." 14. In the case of Gujarat Adani Institute of Medical Sciences Vs CCE & ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial or otherwise the primary use of such building is required to be seen. We find that this argument is convincing as the similar issue has been considered by this Tribunal in the case of B.G. Shirke Construction Technology Pvt. Ltd. Vs. C.C.E. 2014 (33) S.T.R. 77 (Tribunal - Mumbai), wherein it was held that merely because some amount is charged for using the facility of this stadium the same cannot be commercial construction. The said decision was upheld by the Hon‟ble Bombay High Court reported in 2019 (25) GSTL 8 (Bom). The similar issue has been considered in the case of Commissioner of Service Tax Vs. S.M. Sai Construction - 2016 (42) STR 716 wherein the service recipient was charitable trust registered under the Bombay Public Trust Act, 1950.The Tribunal Held that the building constructed was not commercial construction and therefore, Service Tax paid by the recipient was refundable. In an another identical case of Institute of Banking Personal Selection Vs. Commissioner of Service Tax - 2007 (8) STR 579,it was held that an organization does not declare dividend or distribute surplus/profits to its shareholders, trustees and /or members but ploughs back the surplus for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these guest houses are allotted to non-pilgrims as a hotel accommodation services, for those visiting the temple, we have to hold that the said services would fall under exclusion clause of works contract services and tax liability does not arise. For the period post 1-7-2012, Mega-exemption Notification No. 25/2012-S.T., dated 20-6-2012 at Sl. No. 13(c) exempts the tax liability on a building owned by an entity registered under Section 12AA of the Income-tax Act, 1961 and meant predominantly for religious use by general public. This exemption clearly covers the case of the appellant post 1-7-2012 as it is undisputed that appellant is registered with the income tax authorities under Section 12AA as a charitable institutions for the period pre and post 1-7-2012. The exemption granted by Notification No. 25/2012-S.T. (13)(c) would apply in full force. Accordingly, the demand of the service tax on the services rendered of works contract services to the religious institution does not survive and are liable to be set aside as we do so. 10. As regards demands raised on the buildings constructed for C-DAC, NFC and APHMHIDC, we find from the hand-outs given today by the Learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the buildings constructed for ICFAI, we find that the issue is no more res integra as the Tribunal in the case of Vij Construction Pvt. Ltd. v. CCE, New Delhi [2018 (11) G.S.T.L. 169 (Tri. - Del.)] was considering the very same issue of taxability of the services for construction of buildings for ICFAI and in paragraph No. 6 has held that in regard to campus for ICFAI University Dehradun, the buildings are for use of a recognised university for education and the same cannot be considered as commercial buildings. ICFAI University is having pan India presence, operating in various campuses, it has to be considered as an educational institution, as per the ratio of the decision of the Tribunal in the case of Vij Construction Pvt. Ltd. (supra). Accordingly, the service tax liability on the construction of buildings for ICFAI Bangalore, Jaipur and Hyderabad for the period pre and post 1-7-2012 is unsustainable and liable to be set aside and we do so. 12. Learned AR has placed reliance on the judgment of the Hon'ble High Court of A.P. and Hyderabad in the case of Tirumala Tirupathi Devasthanams v. Superintendent of Customs, Central Excise & Service Tax, Tirupathi [2013 (30) S.T.R. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il constructions are used for residential, office purposes or for providing civic amenities. Thus, normally government constructions would not be taxable. However, if such constructions are for commercial purposes like local government bodies getting shops constructed for letting them out, such activity would be commercial and builders would be subjected to service tax." 13. It is explained by the Board in the aforesaid circular that, when the building is solely used for educational purposes, the levy of service tax is not attracted. We, therefore, find that the building having been used for educational purpose and being non-commercial purpose, the said construction activity cannot be subject to levy of service tax during the disputed period." 17. In view of the above discussions, we find that the demand of service tax under WCS for the disputed period for construction of educational institutions cannot sustain. The issue on merits is answered in favour of the appellant and against the Revenue. 18. The Ld. Counsel has argued on the ground of limitation. From the records, it is seen that the entire figures and details for raising the demand is taken from the accounts maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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