Gujarat Adani Institute of Medical Sciences Vs C.C.E. & S.T.-Rajkot (CESTAT Ahmedabad)
CESTAT Ahmedabad held that building constructed by the Appellant is not commercial and industrial construction, therefore does not fall under the category of taxable services, as the same is not used for commercial and industry but it is used for providing education.
Facts- The appellant filed 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 construction of the Medical College Building at Bhuj.
During the Scrutiny of the refund claim revenue observed the discrepancies. The said observations culminated into 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.
Being aggrieved with the aforesaid orders appellant filed appeals before the Commissioner (Appeals), who vide impugned orders-in-appeal upheld the orders passed by the lower Adjudicating Authority and rejected the appeals filed by the appellant. Being aggrieved by the said impugned orders-in-appeal, appellant filed the present appeals.
Conclusion- Held that the construction of building for which refund claim has been filed is used for educational purpose and the object of the use of the building is not for commercial purpose. The certificates and registrations produced by the Appellant clearly established that Appellant i.e M/s Gujarat Adani Institute of Medical Sciences is a charitable trust registered with public trust under the Bombay Public Trust Act, 1950.With all these facts, it is clear that building constructed by the Appellant is not commercial and industrial construction, therefore does not fall under the category of taxable services, as the same is not used for commercial and industry but it is used for providing education. We also noticed that the Appellant have been granted registration of Trust under Section 12AA of the Income Tax Act which shows that Appellant have been registered for non-commercial purpose. Since the organization of the appellant itself is non-profit purpose, it cannot be said that the building is used for commercial activity. Therefore we do not agree with the finding of the Ld. Commissioner that the activity of running medical college is nothing but a commercial one and same cannot be construed as non-commercial activity/ organization.
We find that merely on the basis of the quantum of fees the status of a charitable institution shall not be altered and the institution which is otherwise statutorily, a charitable trust cannot lose its identity as Charitable Trust. On this basis it cannot be construed that the institution is a commercial institution.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
These appeals have been filed challenging the impugned Orders-In-Appeal dated 02-02-2012 and 25-04-2023 respectively passed by Commissioner (Appeals) of Central Excise & Customs, Ahmedabad by which the Learned Commissioner rejected appellant‟s appeals and upheld the order of Adjudicating Authority rejecting the refund claims. Since the issue is common in both the appeals, we are deciding these appeals by this common order.
2. The facts of the case are that the appellant filed 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 construction of the Medical College Building at Bhuj. During the Scrutiny of the refund claim revenue observed the discrepancies. The said observations culminated into 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. Being aggrieved with the aforesaid orders appellant filed appeals before the Commissioner (Appeals), who vide impugned orders-in-appeal upheld the orders passed by the lower Adjudicating Authority and rejected the appeals filed by the appellant. Being aggrieved by the said impugned orders-in-appeal, appellant filed the present appeals.
Shri, Hardik Modh, Learned Counsel appearing on behalf of the appellant submits that it is undisputed fact that the appellant has been registered as 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 the purpose of an object of the organization would be charitable organization.
3.1 He also submits that both the lower authorities failed to appreciate the contents of the Resolution No. HSP/1007/3247/PARK-2/A dated 27.05.2009 passed by Government of Gujarat wherein following points are specifically mentioned.
a. Allocation of land for hospital and medical college;
b. Fees and admission of the medical college;
c. Enhancement of the bed capacity over a period of five years so that requirement of the Medical Council of India is fulfilled every year for the new incoming batch of students in the medical college;
d. The appellant bears revenue and capital expenditure for the medical college;
e. Income generate out of the medical college has to be spent only on the development of the hospital;
Apart from many conditions imposed by the Government of Gujarat through the resolution, the relevant conditions related to the present case are as under.
(3) Gujarat Adani Institute of Medical Sciences will independently manage the affairs of the medical college without any interference by the Hospital Management Committee referred to above, as the fee and admission will be subject to control by the autonomous committee appointed by the Government.
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8. Gujarat Adani Institute of medical Science will provide for all Capital & Revenue Expenditure for the medical college. All income generated out of the Medical College has to be spent only on the development of the hospital.
The above two paras show that any income generated out of medical college would be used only for development of the Hospital.
3.2 He further submits that both the lower authorities failed to appreciate contents of the Memorandum of Association framed under Act XXI of Registration of the 1860 for the registration of Literary, Scientific and Charitable Society. Relevant clauses of the Memorandum of Association clearly reveals that the object of the Appellant to run medical college is for non-commercial purpose.
3.3 He also submits that Ld. Commissioner (Appeals) held that since the appellant charged higher fees, the appellant would be considered as self finance college and therefore, it is held that the appellant is commercial entity. However merely charging higher fees, it would not make any institution a commercial institution. He placed reliance on the following decision.
