Mahatma Gandhi University Eligible for ₹1.47 Cr Service Tax Refund on Legal, Security, Manpower & Works Contract Services: CESTAT [Read Order]

The Customs, Excise, Service Tax Appellate Tribunal ( CESTAT ), Jaipur has ruled that Mahatma Gandhi University of Medical Science and Technology is not a body corporate and directed the refund of ₹1,47,62,737 paid under the reverse charge mechanism.

The Mahatma Gandhi University has filed a refund of ₹1,47,62,737 under section 11B of the Central Excise Act,1944, contending that it was exempted from payment of the Service tax on “Legal Service, Security Service, Manpower Service and Work Contract Services” under the reverse charge mechanism.

It was submitted by the university that it is an autonomous education institute established for charitable purposes and claims for full refund of the amount. The partial refund to the consumer welfare fund of RS. 70,04,231 was also claimed by the university.

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The commissioner has rejected the refund of service tax claimed by the appellant as payment of service tax on “Legal Service, Security Service, Manpower Service and Work Contract Services” is not covered under the Mega Exemption Notification No. 25/2012-St dated 20.06.2012 and the university had not provided complete set of supporting Documents for recognised the university as a body corporate and therefore contended that the university is not eligible for the refund.

The commissioner contended that the sanctioned refund of RS. 70,04,231 was diverted to the consumer welfare fund as service tax was deducted on the expense side of the book entry of the University.

The ruling was delivered by Justice Dr. Rachana Gupta (Judicial Member) and Mr.A.K.Jyothi (technical member).

Justice Dr. Rachana Gupta observed that the University does not fall within the categories enumerated under Section 2(11) of the Companies Act, 2013, which defines the term “body corporate.”

The Tribunal held that the University is functioning as a non-profit charitable institution and, therefore, cannot be classified as a body corporate for the purpose of service tax liability under the reverse charge mechanism.

The bench concluded that the University is eligible for a refund of ₹1.47 crore, paid under the reverse charge mechanism towards service tax on legal services, security services, manpower supply services, and works contract services, as the university is entitled to exemption under Mega Exemptions Notifications No.25/2012-St dated 20.06.2012 and is entitled to receive the full refund to the University.

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