The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that higher fees charged by the charitable institution is not a Commercial act and allowed the refund to Gujarat Adani Institute Of Medical Science.
Gujarat Adani Institute Of Medical Sciences, the appellant filed a refund claim for refund of Service tax under Section 11-B of the Central Excise Act, 1944 paid to M/s Desai Construction Pvt. Ltd., Valsad for the construction of the Medical College Building at Bhuj.
During the Scrutiny of the refund claim revenue observed the discrepancies. The said observations culminated in the issuance of show cause notice dated 18.04.2011 and 25.01.2012 wherein it was proposed to reject the refund claims under Section 11B of the Central Excise Act, 1944. The above show cause notices were adjudicated by the Lower Authority vide his Order-in-Originals dated 10.06.2011 and dated 31.03.2012.
Shri, Hardik Modh, Counsel appearing on behalf of the appellant submitted that it is an undisputed fact that the appellant has been registered as a non-commercial entity. The appellant has neither declared dividend nor distributed surplus /profit to its shareholders, trustees and/or members but ploughs back the surplus for an object of the organization would be a charitable organization.
P.K. Singh, Superintendent (Authorized Representative) appearing on behalf of the Revenue reiterated the findings of the impugned orders.
The appellant awarded the contract to the contractor for the construction of a medical college which has been used for providing medical education to the students. The appellant sought a refund of tax claiming that this transaction was not liable to tax. The issue to be decided is whether the appellant, as the recipient of service, is eligible for a refund of service tax paid by the service provider and whether the appellant can be termed as a „non-commercial organization.
Section 11 B(2)(e) of the Central Excise Act, 1944 permits the person who has borne the tax, can file the refund claim. It was evident that the refund claim doesn’t need to be filed only by the service provider /manufacturer. The person who has borne the duty burden can also claim a refund. There is no restriction in the provision of law.
In the present matter, the contractor collected the service tax separately from the Appellant and deposited it to the Central Government Account. Since the Service tax has been borne by the Appellant, they have rightly lodged the refund claim.
The appellant also argued that, whether, the building is for commercial or otherwise the primary use of such building is required to be seen.
“Merely by charging higher fees an institution cannot be treated as commercial institute accordingly the reasoning on this count of the Lower Authority is illegal and incorrect”, the bench of Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) held.
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