2025-VIL-2071-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 65(25b) of Finance Act, 1994 – Construction services – Tax liability – Appellant is engaged in construction of buildings and civil structures for various clients – Appellant had not paid service tax on amounts received towards construction of buildings for educational institutions by treating such activities as non-taxable – Department issued show cause notice to Appellant by proposing demand of Service Tax under category of Commercial or Industrial Construction Service – Adjudicating Authority confirmed demand as proposed in show cause notice – Whether construction of buildings for educational institutions such as schools and colleges is taxable under Commercial or Industrial Construction Service – HELD – Section 65(25b) of the Act defines Commercial or Industrial Construction Service to mean construction of a building or civil structure used or to be used primarily for commerce or industry. Mere collection of fees does not make an educational institution commercial, so long as the surplus is ploughed back into institution and not distributed for private profit. Construction for organisations established solely for educational, religious, charitable, health or philanthropic purposes and not for profit would be non-commercial. Construction activity in present case is squarely outside scope of Commercial or Industrial Construction Service and the levy fails at the threshold. Demand is liable to be set aside – Appeal allowed
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