Custom, Excise & Service Tax Tribunal
Cgst & Ce Kanpur vs Ms Vishnu Saran And Company on 23 May, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Cross Application No.70112 of 2021
(on behalf of Respondent)
in Service Tax Appeal No.70421 of 2020 (Arising out of Order-in-Original No.KNP-EXCUS-000-COM-004-20-21 dated 26.05.2020 passed by Commissioner of CGST, Kanpur) Commissioner of Central Excise & CGST, Kanpur .....Appellant (117/7, Sarvodaya Nagar, Kanpur-208005) VERSUS M/s Vishnu Saran & Company, ....Respondent (113/163, Swaroop Nagar, Kanpur) APPEARANCE:
Shri Santosh Kumar, Authorized Representative for the Revenue Shri Dharmendra Srivastava, Chartered Accountant for the Assessee CORAM: HON‟BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON‟BLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) MISCELLANEOUS ORDER NO.- 70113/2025 FINAL ORDER NO.- 70320/2025 DATE OF HEARING : 03.12.2024 DATE OF PRONOUNCEMENT : 23.05.2025 P. K. CHOUDHARY:
We have carefully considered the impugned Order, the submission made in the Departmental Appeal and the Cross Objection filed by the Respondent assessee, as well as the contentions raised during the arguments. We have perused the appeal records before us.
2. Before going into the merits of the case, we find it prudent to briefly discuss the facts herein:-
In the present case, the respondent assessee is M/s Vishnu Saran & Co., registered with the Service Tax Department under the Service category of ―Commercial Construction Services‖.
Service Tax Cross Application No.70112 of 2021 2 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 A Show Cause Notice1 was issued against the assessee in C.No. V(15)Off/Adj./ST/143/2010/15983 dated 21.10.2020 for the period from 2005-06 to 2009-10 and in C.No. V(15)Off/Adj./ST/90/2011/16747 dated 18.10.2021 for the period from 2010-11 proposing demand of service tax of Rs.1,68,09,599/-.
An Order-in-Original dated 06.09.2012 was passed wherein the entire demand proposed in the SCNs was confirmed alongwith interest and imposition of penalty.
An appeal was filed by the assessee against such Order before this Tribunal, and vide Final Order No.70072/2018 dated 03.01.2018, the matter was remanded back for fresh adjudication.
Subsequently, the impugned Order-in-Original No. KNP-EXCUS- 000-COM-004-20-21 dated 26.05.2020 was passed by the Adjudicating Authority wherein the entire demand of Service Tax of Rs.1,68,09,599/- alongwith interest and penalty under Section 78 of Finance Act, 1994 raised in the SCN has been dropped based on two main contentions :-
That the work executed by the Respondent assessee for Avas Vikas Parishad, UPRNN Ltd etc. pertains to construction of individual houses and relates to low cost housing under welfare scheme for personal use, thus is out of the purview of ‗Construction of Complex' service and/or ‗Commercial or Industrial Construction' service and hence is not taxable. That the work executed by assessee for IIT and other educational institutions is not taxable insomuch that hospitals, educational institutions, charitable institutions etc. cannot be treated as industry and are out of service tax purview.
3. Now, we take up the first issue of a demand of service tax on construction activities undertaken by the assessee for Avas Vikas Parishad, LIC etc. regarding construction of housing. 3.1 The Adjudicating Authority has given credence to the assessee's submission that the construction undertaken was with 1 SCN Service Tax Cross Application No.70112 of 2021 3 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 respect to individual houses for residential purposes, and not of buildings having more than 12 residential units, and thus out of the scope of construction service under Service tax regime. The Adjudicating Authority has relied upon the cases of the Tribunal in M/s Macro Marvel Projects Ltd. Vs. CST and in A.S. Sikarwar Vs. Commissioner of Central Excise, Indore to determine that since the assessee has constructed single houses for residential purpose instead of a residential complex, the same would be out of the scope of ‗Construction of Complex' service and service tax would not be applicable. Additionally, we observe that on the issue of service rendered to UP Avas Vikas Parishad, wherein the houses constructed by assessee were not sold but were rather allotted by District Magistrate for a 30 year lease to economically weaker sections/peoples purely in public interest under the scheme of ‗Manyavar Kashiram Shahri Garib Avas Yojna'; the Adjudicating Authority contends that such service would fall under the exclusion clause of ‗personal use' provided in the definition of ‗Residential Complex' and would be out of service tax purview. We observe that the Adjudicating Authority has relied upon the decisions of this Tribunal in the cases of CCE, Allahabad Vs. Ganesh Yadav [2017 (6) G.S.T.L. 428] and NCR Builders Pvt. Ltd. Vs. Commissioner Of C. EX. & S.T., Ghaziabad [2017 (3) G.S.T.L. 198] to support its reasoning. 3.2 The Revenue in its Appeal has disputed such decision based on the allegation that the houses constructed by the assessee for Avas Vikas Parishad etc. were under a composite contract. It is argued that since the construction was done under a composite contract pertaining to a building with more than 12 residential units, the Macro Marvel case relied upon is not applicable in the present case. It is further contended that since the assessee has entered into a composite contract of construction of houses for Avas Vikas Parishad, the decision of this Tribunal in the case of CCE, Allahabad Vs. Ganesh Yadav is not applicable. Further, the Revenue contends that an appeal was filed by the Department against the decision in the case of CCE, Allahabad Vs. Ganesh Yadav, which was later withdrawn in light of monetary limit, and hence, the ratio of such decision is Service Tax Cross Application No.70112 of 2021 4 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 not applicable herein. The Revenue further contends that the houses constructed under the scheme of ‗Manyavar Kashiram Shahri Garib Avas Yojna' are not exempt under any notification. 3.3 The assessee in its cross objection has supported the reasoning laid down by the Adjudicating Authority and has once again placed reliance upon the decisions of this Tribunal in the cases of CCE, Allahabad Vs. Ganesh Yadav [2017 (6) G.S.T.L. 428] and NCR Builders Pvt. Ltd. Vs. Commissioner of C. EX. & S.T., Ghaziabad. The assessee has also brought on record various Letters and certificates as evidences of the fact that the work executed by assessee for Avas Vikas Parishad, UPRNN Ltd., etc. pertains to construction of individual houses and relates to low cost housing under welfare scheme for personal use, thus is out of the purview of ‗Construction of Complex' service and/or ‗Commercial or Industrial Construction' service and hence is not taxable. Before going into the intricacies of the matter, we find it prudent to refer to the definitions of ‗Construction of Complex' and ‗Residential Complex'.
Section 65(30a) of the Finance Act, 1994 -
―(i) ―Construction of Complex‖ means -
(a) construction of a new residential complex or a part thereof; or
(b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or
(c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex;‖ Section 65(91a) of the Finance Act, 1994 - ―(ii)―Residential Complex‖ means any complex comprising of--
(i) a building or buildings, having more than twelve residential units;
(ii) a common area; and Service Tax Cross Application No.70112 of 2021 5 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020
(iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person.
Explanation. -- For the removal of doubts, it is hereby declared that for the purposes of this clause, --
(a) ―personal use includes permitting the complex for use as residence by another person on rent or without consideration;
(b) ―residential unit means a single house or a single apartment intended for use as a place of residence;‖ 3.4 We have perused through the various documents/evidences brought on record by the parties. We observe that the Revenue has failed to bring any evidence to prove its allegation that the construction services provided by assessee were with respect to a building or buildings, having more than twelve residential units. The entire contention of the Revenue seems to revolve around the fact that the assessee had entered into a composite contract with Avas Vikas Parishad for construction of houses.
However, on a perusal of the above definitions, we fail to find any significance of such argument. The existence of a composite contract does not appear to have any bearing on the present case. The assessee in the present case entered into a contract with Avaas Vikas Parishad to construct individual houses under the scheme of ‗Manyavar Kashiram Shahri Garib Avas Yojna' for low cost housing for economically weaker sections of society. We do not find any evidence of the construction being a building. with more than 12 units, or of any common area and/or facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premise. We observe that the Revenue in its present appeal appears to dispute the well-reasoned and speaking Order passed by the Adjudicating Authority without bringing any Service Tax Cross Application No.70112 of 2021 6 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 evidence on record and without providing any cogent reasoning. We do not find any merit in such approach. As per the documents brought on record before us, and in view of the above discussion, we agree with the Adjudicating Authority that the assessee was involved in the construction of single houses instead of a residential complex. Accordingly, we find that the issue of taxability of such construction of individual houses has been settled in the case of Macro Marvel Projects Limited [2008 (12) S.T.R. 603 (Tri.)], which had been later affirmed by the Hon'ble Supreme Court. Further, the ratio laid down in the Marco Marvel Projects case was also followed by the Tribunal in A.S. Sikarwar Vs. Commissioner of Central Excise, Indore [Appeal No. ST/871 of 2011].
3.5 Now, we consider the issue of the taxability of construction of houses by the assessee for Avas Vikas Parishad under the scheme of ‗Manyavar Kashiram Shahri Garib Avas Yojna' for low cost housing for economically weaker sections of society. The definition of ‗Residential Complex' provided in Section 65(91a) of the Finance Act, 1994 clearly provides for the exclusion of a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for ‗personal use' as residence by such person. The term ‗personal use' has also been clarified in the Explanation, stating that ‗personal use' includes permitting the complex for use as residence by another person on rent or without consideration. In the present case, we find that the assessee entered into contract with Avas Vikas Parishad to construct low cost housing under the scheme of ‗Manyavar Kashiram Shahri Garib Avas Yojna'. Such houses constructed by assessee were not sold but were rather allotted by District Magistrate for a 30 year lease to economically weaker sections/peoples purely in public interest. We find that such fact was not disputed by the Revenue in its appeal. In this regard, we have also perused through the various documents/evidences brought on record by the assessee in its Cross objections, which are referred to below :-
Service Tax Cross Application No.70112 of 2021 7 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 ―a. Letter dated 18.07.2011 of the respondent evidencing submission of documents, relating to construction of residential complex under Manniya Shri Kanshi Ramji Shahri Garib Avas Yojna executed by U.P. Avas Evam Vikas Parishad.
b. Certificate dated 30.06.2011 issued by executive engineer U.P. Avas Evam Vikas Parishad. In the said certificate the competent authority had certified that under this scheme homeless and poor persons were given houses free of cost and it was further clarified that the documents issued by UP Government Head Quarter clearly certified that in terms of Finance Bill , 1994, Section 65(91a), there is no levy of service tax in respect of specified residential complex, constructed by the respondent.
c. Letter dated 18.06.2010, issued by Finance Controller, U.P. Avas Evam Vikas Parishad evidencing exemption from the levy of service tax in respect of the work executed by the respondent which interalia enclosed legal opinion by auditing firm M/s P. S. Bhargava & Company. d. Letter dated 18.06.2010 issued to Deputy Secretary, Aawas Evam Urban Development, UP Government, Lucknow with regards to non levy of service tax in respect of Manniya Shri Kanshi Ramji Shahri Garib Avas Yojna, that the same enjoys benefit of exemption from the levy of service tax.
e. Letter dated 07.06.2011 with regard to construction of girls hostel in HBTI hostel and Kanpur University under Manniya Shri Kanshi Ramji Shahri Garib Avas Yojna. f. Letter dated 26.12.2009 U.P. Avas Evam Vikas Parishad confirming construction of Single Unit Houses.(Emphasis Supplied) g. Copy of Letter No. 4328/9-5-08-153 SA/2008 dated 09.05.2008 issued by Uttar Pradesh Administration in relation to Shri Kanshi Ramji Shahri Garib Awas Yojna. h. Copy of Letter No. 7931/9-5-2009 - 247 SA/08 TC dated 04.12.2009 issued by Uttar Pradesh Administration in relation to Shri Kanshi Ramji Shahri Garib Awas Yojna.
Service Tax Cross Application No.70112 of 2021 8 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 i. Sample copy of Allotment Letter issued by The Governor of Uttar Pradesh to one of the Allottee namely Shri Raj Kumar under Shri Kanshi Ramji Shahri Garib Awas Yojna.‖ 3.6 We find that the houses constructed by the assessee for Avas Vikas Parishad, and were then provided to economically weaker sections of society for free housing. Thus, such construction would fall squarely under the ambit of the exclusion for personal use provided in the definition of Residential Complex. The revenue in the present Appeal has disputed the same in light of the composite contract entered into by the assessee. We do not find any merit or logic in such contention. The existence of a composite contract is immaterial to the issue at hand. Irrespective of the composite contract, the definition of Residential Complex remains unchanged and the houses constructed by the assessee fall under the exclusion of personal use provided therein. Further, the Revenue has also contended that the exemption of service tax provided in service tax regime only applies to constructions under the Jawaharlal Nehru National Urban Renewal Mission. We do not find any logic or merit in such argument. In the present case, the assessee is not availing any exemption provided in an exemption notification. Instead, the construction services by the assessee, involving single houses used for personal residential use, is out of the scope of the definition of Residential complex and thereby is not taxable under the head of ‗Construction of Complex' service. In light of the matter being that of pre-negative list regime, since the service in question does not fall under any head of taxable service specified in the Finance Act, 1994; no service tax would be applicable. The name of the scheme under which the houses are constructed is immaterial.
3.7 Also, we find that the issue at hand is no longer res integra and has been settled by this Tribunal in the case of CCE, Allahabad Vs. Ganesh Yadav [2017 (6) G.S.T.L. 428], wherein it was held that :-
―5. We find that the issue in itself is incorrect. Larger Bench of this Tribunal in the case of Lanco Infratech Ltd.
Service Tax Cross Application No.70112 of 2021 9 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 vs. CC, CE & ST - (2015) 38 STR 709 (Tri. - LB) = 2015-
TIOL-768-CESTAT-BANG-LB has held that such activity which was not taxable prior to 01.06.2007 under the category of Commercial and Industrial Construction continue to be non taxable under the category of Works Contract Service from 01.04.2007. Further we find that under similar facts and circumstances, a co-ordinate Bench of this Tribunal in the case of CCE Vs. Manoj Kumar Singh Appeal No. ST/70135/2015 = 2016-TIOL-1979-CESTAT- ALL vide a stay order dated 19.05.2016 was pleased to reject the stay application filed by Revenue under the similar facts and circumstances where the respondent Manoj Kumar Singh had constructed civil structures, repairing, doing alteration, renovation or restoration of old structures, completing and finishing job, installation of electrical and electronic devices etc. under contract and work orders of VDA, Varanasi . it was observed that prima- facie no service tax is leaviable on construction of low cost housing. It is also apparent that the flats constructed under the scheme are neither intended for commerce or industry but for the welfare of the weaker section of the society. A reference was alsomade to precedent decision in the case of ECP Housing (India) Pvt. Ltd. vs. Commissioner of Central Excise, Nasik reported at 2013(30) STR 703 wherein it was held that the demand under commercial and industrial construction for contract of construction divided into two parts of construction of stadium and construction of shopping complex around stadium held activity of construction of sports complex/stadium cannot be termed as commercial and industrial construction. We also agree with finding of learned Commissioner (Appeals) holding that the activity for constructing houses by the appellant for economically weaker section under works allotted by the Varanasi Development Authority under the scheme of Government of U.P., the activities is neither taxable under works contract services nor under Construction of Complex/Commercial or Industrial Service Tax Cross Application No.70112 of 2021 10 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 Construction Services more particularly under the exclusion clause which provides that construction classifiable under the category of residential complex service does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person and personal use have been further explained as including or permitting the complex for use as residence by another person on rent or without consideration. Accordingly, we dismiss the appeal of Revenue. The respondent-assessee will entitled to consequential benefit, if any, in accordance with law.‖ Accordingly, we find that the work undertaken by assessee for constructing low cost housing for Avas Vikas Parishad is out of the purview of Service tax. We do not find any merit or logic in the Revenue's argument that such case is not applicable herein in view of the Departmental appeal filed against it which was withdrawn due to monetary limits. Once a well-reasoned judgement has been passed by the Tribunal, the same cannot be disregarded based on an Appeal filed against such judgement, unless and until the judgement is later stayed/overturned by a higher court. Since the Tribunal's decision has not been overturned by a higher court, it is a binding precedent that must be followed by the Revenue in similar facts and circumstances, like in the present case.
3.8 Further, we observe that a similar matter of construction by a assessee under ―Manyaver Kanshiramji Shahri Garib Awas Yojana‖ was taken into consideration by this Tribunal in the case of NCR Builders Pvt. Ltd. Vs. Commissioner Of C. EX. & S.T., Ghaziabad [2017 (3) G.S.T.L. 198 (Tri. - All.)], wherein it was held that :-
―2. The brief facts of the case are that the appellant- assessee had constructed the flats for Saharanpur Development Authority (S.D.A.) under ―Manyaver Kanshiramji Shahri Garib Awas Yojana‖ for the Service Tax Cross Application No.70112 of 2021 11 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 Government of U.P. The Yojana was for the free allotment to the poor class of the society like the shelter less, handicapped, below poverty line persons, etc. The department opined that the construction of the residential house more than 12 units in a block is liable to be Service Tax on the basis of work contract. It is the finding of the Commissioner that no exemption is available to the appellant and it makes no difference that houses were constructed on the basis of work contract for any scheme.
So he levied Service Tax upon the assessee-appellant. Being aggrieved, the appellant has filed the present appeal.
3. After hearing both the parties and on perusal of the record, it appears that as per the scheme, houses were allotted without any consideration, i.e. free of cost to the weaker section of the society on lease basis. Ownership of the flats is always with the Government of U.P. Section 65(91a) defines the residential complex and its explanation (a) states that -
― ―personal use‖ includes permitting the complex for use as residence by another person on rent or without consideration.‖
4. In the instant case, it appears that the houses were given for the purpose of residence without any cost/without consideration. Hence, it is covered by the Explanation (a) of the said Section 65(95a). Thus, the complex is not subjected to Service Tax on the basis of work contract as residential complex was given without consideration.
5. In view of the above, we set aside the impugned order and allow the appeal with consequential benefit, if any‖.
3.9 Thus, in light of such case laws, conclude that the service provided by assessee of construction of houses to Avas Vikas Parishad, LIC, UPRNN etc. are out of the purview of service tax regime. Accordingly, we uphold the dropping of demand in the Order-in-Original passed by the Adjudicating Authority and Service Tax Cross Application No.70112 of 2021 12 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 disallow the Appeal filed by the Revenue. Next, we move onto the second issue of the demand on construction services provided by the assessee to educational institutions like IIT, JK Educational Foundation, Super house Education Centre etc. relating to construction of buildings i.e. hostels, medical college, lab etc. and repairing activities.
4.1 The Adjudicating Authority in the impugned Order has relied on the judgement of Hon'ble Supreme Court in the case of M/s Msco. Pvt. Ltd. Vs. UOI [AIR 1985 SC 76 79] to determine that the constructions undertaken by the assessee are not with respect to commerce or industry, and hence would be out of the purview of ‗construction service' ‗commercial or industrial construction service'. The Adjudicating Authority has also relied upon MF (DR) Circular No.80/10/2004-ST dated 17.09.2004 and the Tribunal's decision in the case of CCE & ST vs. Shri Kripa Shankar Yadav [Final Order No.72828/2018 dated 06.12.2018] to hold that the institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for purposes of profit; like in the present case, are not taxable.
4.2 The Revenue in its Appeal contends that the judgement of Hon'ble Supreme Court in the case of M/s Msco. Pvt. Ltd. Vs. UOI is not applicable herein, as such judgement pertains to hospitals or dispensaries whereas the present case refers to educational institutions. It is further contended that the Adjudicating Authority has not properly examined whether the educational bodies under reference were set up with profit motive or not. Finally, it is contended that the Adjudicating Authority has allowed the exemption without a detailed examination in light of the need for strict interpretation of tax exemption statute.
4.3 The assessee in its cross objection has argued that the judgement of Hon'ble Supreme Court in the case of M/s Msco. Pvt. Ltd. Vs. UOI is squarely applicable herein, insomuch that it lays down that the definition of the term industry cannot be given the same meaning as provided in the Industrial Disputes Act, 1947 and an industry is only a place where the process of Service Tax Cross Application No.70112 of 2021 13 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 manufacture or production of goods is carried on. It is further contended that even otherwise, as per the definition of Industries provided in Section 2(j) of Industrial Disputes Act, 1947, educational and/or charitable institutions are not industry. The assessee has also brought on record the following evidences to substantiate that the Adjudicating Authority had carefully examined the charitable/non-profit nature of the concerned educational institutions and reached to the correct conclusion of non-applicability of service tax :-
"a. Certificate dated 24.02.2009, issued by Commissioner, Income Tax Kanpur in respect of Jai Narain Vidya Mandir Inter College, Lakhanpur, Kanpur, qualifying the definition of charitable trust and registered under the Section 12 of the Income Tax Act since 30.05.2007.
b. Certificate dated 24.02.2009 issued by Commissioner, Income Tax Kanpur in respect of Jugal Devi Saraswati Vidya Mandir VarishthaMadyamik Vidyalaya, Kanpur, qualifying the definition of charitable trust and registered under the Section 12 of the Income Tax Act since 29.05.2007.
c. Certificate issued by Shri Puranchandra Gupta Smarak Trust, registered under Section 12A of the Income Tax Act, certifying that-
―Shri Puranchandra Gupta Smarak Trust is an educational society for the purpose of developing and catering the need of educational, institutional, cultural and medical and other Philanthropic purposes. One of the main objectives for the establishment of the society is to serve the society for promoting educational institutional's to give benefit to the persons in respect of cast, creed, race, or religion and without having any profit.
Following school/ institutions run under the ownership of the trust-
Puranchandra Vidya Niketan, Kanpur ............................& Others‖ Service Tax Cross Application No.70112 of 2021
14 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 Certificate dated 11.07.1990, issued by Commissioner, Income Tax Kanpur, granting benefit of Charitable Trust U/s 12 of the Income Tax Act, to the trust Shri Puranchandra Gupta Smarak Trust.
d. Allotment letter of Kanpur Development Authority evidencing the land allotted for the construction of Puranchandra Vidya Niketan & Jagran Institute of Management Studies to be specified for the purpose of educational institute.
e. Certificate of society and of educational trust issued by Kanpur Development Authority for Super House Education Foundation inter-alia including the Allen House Institute of Technology constructed by the appellant at Rooma, District Kanpur Nagar.
f. Certificate dated 23.09.2010 issued by IIT Kanpur to similarly placed service provider certifying that with regard to construction of various units (Civil work) at IIT, Kanpur the legal section has informed that no service tax is leviable on the specified work of civil construction."
4.4 In light of the above mentioned documents brought on record by the assessee, we find it evident that the educational bodies under reference where charitable in nature and not for a profit motive. We do not find any merit in the Revenue's contention that the Adjudicating Authority has not properly examined whether the educational bodies under reference were set up with profit motive or not, only vague intention is made. We observe that the Adjudicating Authority has thoroughly perused the documents brought on record by assessee and arrived at a correct conclusion regarding the nature of the concerned educational institutions. Before going into the issue of taxability, we find it prudent to consider the definition of "Commercial or Industrial Construction" as provided under Section 65(25b) of the Finance Act, 1994; which reads as under :--
Service Tax Cross Application No.70112 of 2021 15 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 ―(a) construction of a new building or a civil structure or a part thereof; or
(b) construction of pipeline or conduit; or
(c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or
(d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is --
(i) used, or to be used, primarily 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;‖ 4.5 We observe that for an activity to fall under the ambit of Commercial or Industrial Construction service, the concerned building or civil structure constructed should be used, occupied or engaged in commerce or industry, or work intended for commerce or industry. The Revenue in the SCN had relied upon the decision of Supreme Court in the case of Bangalore Water- Supply and Sewerage Board, etc. vs. R. Rajappa & Ors to hold that the concerned education institutions fall within the definition of ‗industry' as under the Industrial Disputes Act, 1947.
The Adjudicating Authority in the impugned Order has relied on the judgement of Hon'ble Supreme Court in the case of M/s Msco. Pvt. Ltd. Vs. UOI [AIR 1985 SC 76 79] to determine that the constructions undertaken by the assessee are not with respect to commerce or industry, the relevant extract of which is reproduced below :-
Service Tax Cross Application No.70112 of 2021 16 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 ―It is true that in the Bangalore Water- Supply and Sewerage Board, etc. v. R. Rajappa & Ors. this Court has hold that hospitals would also come within the definition of the expression 'industry' given in the Industrial Disputes Act, 1947 which is as wide as the legislature could have possibly made it. But that definition cannot be used for interpreting the word 'industry' in a notification granting exemption from customs duty under the Customs Act, 1962. A perusal of the provisions of the Constitutions shows that the expression 'industry' does not ordinarily posses such wide meaning. In Article 19 (6) (ii) the word 'industry' does not include 'trade', 'business' or 'service' which are specifically referred to therein. Then we have the expression 'industry' in Entires 7 and 52 of List I, Entry 24 of List II and Entry 33 of List III of the Seventh Schedule to the Constitution. The said expression in these entries does not include trade or commerce or distribution of goods which are found else where in the said Lists. What is of significance is that in List II 'hospitals and dispensaries' are specifically referred to in Entry 6 and they cannot, therefore, possibly fall under Entry 24 thereof which refers to 'industries'. As observed by this Court in Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors. 'industry' in the wide sense of the term would be capable of comprising three different aspects: (1) raw materials which are an integral part of the industrial process, (2) the process of manufacture or production, and (3) the distribution of the products of the industry. But raw materials are dealt with by Entry 27 of List II, the process of manufacture or production by Entry 24 of List II except where the industry is a controlled industry when it would fall under Entry 52 of List I and the products of the industry would fall under Entry 27 of List II except where they are products of controlled industry when they would fall under Entry 33 of List III. An analysis of these provisions shows that 'industry' ordinarily means the process of manufacture or production. We have referred to the above provisions of Service Tax Cross Application No.70112 of 2021 17 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 the Constitution only to show how that expression is understood ordinarily. It may also be relevant to mention here that the new definition given to the word 'industry' by Parliament in the Industrial Disputes (Amendment) Act, 1982 (46 of 1982) specifically excludes 'hospitals or dispensaries' from the category of 'industry'. It shows that the meaning given to the expression 'industry' in the Industrial Disputes Act, 1947 cannot be depended upon while construing other statutes or statutory instruments and it should be confined to the Industrial Disputes Act, 1947. We are of the view that in the notification under which the exemption is claimed by the petitioner, the word 'industry' means only the place where the process of manufacture or production of goods is carried on and it cannot in any event include 'hospitals, dispensaries or nursing homes'.‖ On a perusal of the above judgement, we find that it is a settled legal issue that the definition of industry as provided in the Industrial Disputes Act, 1947 upheld in Bangalore Water-
Supply and Sewerage Board, etc. v. R. Rajappa & Ors is not applicable in Service tax regime. We do not find any merit in Revenue's contention that such judgement only pertains to hospitals and dispensaries. The Hon'ble Supreme Court has clearly held that the term ‗industry' means a place where the process of manufacture or production of goods is carried on and institutions like hospitals, educational, charitable organizations etc. would not fall within the ambit of the same. 4.6 Further, we find that even the definition of ‗industry' provided in Section 2(j) of the Industrial Disputes Act, 1947 (as amended in 1982), excludes educational and charitable institutions from its ambit, as evidenced below :-
Section 2(j) of the Industrial Dispute Act, 1947 defines „industry‟ as under-
―[(j) ―industry‖ means any systematic activity carried on by the co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by through an agency, including a Service Tax Cross Application No.70112 of 2021 18 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes which are merely spiritual or religious in nature), whether or not:-
i) any capital has been invested for the purposes of carrying on such activity; or
ii) such activity is carried on with a motive to make any gain or profit, and includes-
(a) any activity of the Dock labor Board established under section 5-A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948);
(b) any activity relating to the promotion of sales or business or both carried on by an establishment, but does not include-
(1) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one.
Explanation- For the purposes of this sub-clause, ―agricultural operation‖ does not include any activity carried on in a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951; or (2) hospitals or dispensaries; or (3) educational, scientific, research or training institutions; or (4) institutions owned or managed by organization wholly or substantially engaged in any charitable, social or philanthropic service; or (5) Khadi or Village Industries; or (6) Any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space;
(7) Any domestic service; or (8) Any activity, being a profession practiced by an individual or body of individuals, if the number of persons employed by the individual or body of individuals in relation to such profession is less than ten; or (9) Any activity, being an activity carried on by a co- operative society or a club or any other like body of individuals in relation to such activity is less than ten]‖ We find that even if the definition of industry as under the Industrial Disputes Act, 1947 is relied upon as contended by Revenue, the concerned educational institutions would be Service Tax Cross Application No.70112 of 2021 19 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 excluded from its ambit. We note that no submission has been made by the Revenue in its Appeal in this regard. 4.7 Additionally, the Adjudicating Authority has also relied upon MF (DR) Circular No.80/10/2004-ST dated 17.09.2004 and the Allahabad Tribunals' decision in the case of CCE & ST vs. Shri Kripa Shankar Yadav [Final Order No.72828/2018 dated 06.12.2018] to support its reasoning, the relevant extract of which is reproduced below :-
MF (DR) Circular No.80/10/2004-ST dated 17.09.2004 -
―13.2 The leviability of service tax would depend primarily upon whether the building or civil structure is used, or to be used for commerce or industry. The information about this has to be gathered from the approved plan of the building or civil construction. Such constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purposes of profit are not taxable, being non-commercial in nature. Generally, government buildings or civil 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.‖ Allahabad Tribunals‟ decision in the case of CCE & ST vs. Shri Kripa Shankar Yadav [Final Order No.72828/2018 dated 06.12.2018] :-
―2. On going through the facts on record we note that the respondent was registered with the Service Tax Department for providing taxable services covered under Works Contract Service. During the course of investigation, it was found that the appellant has rendered services to IIT, Kanpur CPWD for the period October, 2009 to March, 2014. The Department was of the view that the services of appellant are classifiable under ―Works Contract Services‖ and subject to service tax. However, the appellant has claimed that their activities are not for purpose of commerce and industry and are out of purview of tax for the period till 30.06.2012 and are exempted form service Service Tax Cross Application No.70112 of 2021 20 (on behalf of Respondent) in Service Tax Appeal No.70421 of 2020 tax by virtue to Mega Exemption Notification No.25/2012- ST dated 20.06.2012 for the period w.e.f. 01.07.2012.
5. We find that for arriving at the above findings, the Commissioner (Appeals) has relied upon the Boards Circular as also Hon‟ble Patna High Court's decision in the case of M/s Shapoorji Paloonji& Company (P) Ltd. Vs Commissioner of Customs, Central Excise & Service Tax 2016-TIOL-556-HCPATNA-ST. The revenue in their memo of appeal, nowhere contested the applicability of the said decision. Otherwise also, we find that Board Circular supports the assessee‟s case and it is well settled law that revenue cannot go against the Board Circular. As such, we find no justification to interfere in the impugned order of Commissioner (Appeals).
6. Revenue's appeal is accordingly rejected.‖ 4.8 We find that in light of said Circular and judgement, it is a settled issue that educational institutions like IIT, JK Educational Foundation etc. which are established for educational, charitable purposes are not primarily used, occupied or engaged in commerce or industry and would not be taxable under the head of ―Commercial or Industrial Construction‖ service. Such Circular is binding on the Revenue and we do not find any reason to deviate from the decision laid down by this Tribunal on this issue. Accordingly, we uphold the Adjudicating Authority's decision of non-taxability of the construction services prided by assessee to education institutions like IIT, JK Educational Foundation etc.
5. In view of above discussions, we do not find any occasion to interfere with the impugned order and the same is sustained.
6. The appeal filed by the Appellant Revenue is dismissed.
Cross objection also gets disposed of.
(Order pronounced in open court on - 23.05.2025) (P. K. CHOUDHARY) MEMBER (JUDICIAL) (ANIL G. SHAKKARWAR) MEMBER (TECHNICAL) LKS