The assessee was carrying out construction work for various educational institutions, under the Departmental audit it was noticed that the appellant had carried out the construction work for Maharaja Vinayak Dental College and Research Institute, Jaipur, Gyan Vihar School of Engineering and Technology Jagatpura, Jaipur and Jagan Institute of Management Studies, Jaipur. The Department was of the view that the construction work carried out for the above institutions will be liable for payment of Service Tax under the category of Commercial or Industrial Construction Service falling under Section 65 (30a) of the Finance Act, 1994.
Further the assessee contented that all the three educational institutions for which construction activity was carried out are conducting courses which are affiliated and recognized by various universities and other competent authorities such as AICTE/ICMR/State Government. She submitted that the adjudicating authority and the appellant authority have taken the view that these educational institutions are ‘commercial concerns’ in view of the high fees charged by them. She emphasized that charging of fees does not come in the way of considering these educational institutions as ‘non-commercial‘ as held by the Tribunal in the case of Banna Ram Choudhary v. CCE [Final Order No. 53149 of 2017, dated 1-5-2017] wherein the Tribunal set aside the demand for Service Tax in respect of construction work carried out for educational institutions.
After hearing both the contention the tribunal observed that the appellants claimed that the substantial part of the demand relates to construction of building for colleges. These are institutions approved by the competent authority like AICTE and are affiliated to recognized universities. We note that for liability under “commercial or industrial construction service”, the buildings constructed should be primarily used for “commerce or industry”. Buildings used for educational purpose by recognized educational institutions cannot be categorized as “commercial buildings”. The quantum of fee collected or the owner of the building being a “commercial person”, will not have effect on the categorization of the building. The lower authorities gave emphasis to purported commercial nature of the owner of the building. This, in our view, is not relevant.’ Hence Carrying out construction work for educational institutions not liable to ST as Commercial construction service.
Citation: [2018] 96 taxmann.com 342 (New Delhi – CESTAT)