2026-VIL-1542-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exemption for renting of immovable property to educational institution under clause 9(b) of Mega Exemption Notification No. 25/2012-ST - Appellant let out immovable property under lease deed dated 01.05.2004 to Ritnand Balved Education Foundation, a registered society engaged in providing educational services. Department issued Show Cause Notice for recovery of service tax amounting to Rs. 2,15,769/- along with interest and penalties under Sections 70 and 78 of Finance Act for the period 2012-13 on the ground that appellant did not file service tax returns and was liable to pay service tax for rendering service of renting immovable property. Appellant claimed exemption under clause 9(b) of the notification which provides exemption for services provided to or by an educational institution in the form of renting of immovable property - Whether the service of renting immovable property to Ritnand Balved Education Foundation qualifies for exemption under clause 9(b) - HELD - The bare perusal of the lease deed reveals that education is not the only purpose for the leased premises. The premises were taken on rent for various other purposes including commercial use as well as hostel for the students. The lease deed nowhere defines the lessee/tenant to be an educational institute. The document is silent about the nature of activities being carried out. Ritnand Balved Education Foundation is not proven to be an educational institute. The certificate issued by Amity University is dated 27.07.2020 whereas the impugned order is dated 16.06.2020 hence the document cannot be relied upon at this stage. The anus of claiming eligibility under exemption notification rests upon the assessee. Exemption notifications are required to be interpreted strictly. Since the lessee/tenant is not proven to be an educational institute the exemption does not apply. The benefit has to be given strictly when the rented premises are used by the educational institute. Appellant has failed to discharge the said burden. Hence the denial of exemption is justified and demand for service tax is confirmed - The appeal is partly allowed - Applicability of extended period of limitation under Section 73 read with Section 75 of Finance Act - Appellant claimed that extended period of limitation is not invoable as the appellant was under bona fide belief of applicability of exemption under the Mega Exemption Notification and interpretational reason for non-payment of tax should not attract extended period of limitation - Whether extended period of limitation is rightly invoked when appellant did not file service tax returns despite liability - HELD - It is a settled law that it is not merely the non-payment of service tax but a positive act on part of the assessee as may prove the intention or mens ria of the assessee to evade the payment of tax which is relevant for invoking the extended period of limitation. The appellant was not filing service tax returns despite having liability to pay service tax. This amounts to suppression of facts to evade the payment of tax. The plea that the society was under bona fide belief of eligibility of exemption under Mega Exemption Notification and due to interpretational reason the tax was not paid is not acceptable as the appellant has already failed to prove itself to be an educational institute and the premises did not remain used for education purposes only. The extended period of limitation has rightly been invoked while issuing the Show Cause Notice. However the normal period has to reckon from the last date of filing of service tax return and partial demand in the question beyond five years hence is hereby set aside. Demand for the remaining period including normal period is hereby confirmed. The penalty also is proportionately reduced.
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