Applicability of Service Tax on Educational Institution. - Works Contract.

[Pawan Vani & Associates]

Dear All,

Please note that Government has issued a Notification No.25/2012-ST dated 20th  June, 2012, exempting certain services. Sl. No. - 9 thereof reads as follows: 

  

“Services provided to an educational institution in respect of education exempted from service tax, by way of,- 

 

(a) auxiliary educational services; or 

(b) renting of immovable property;”. 

With reference to the above, please advice whether Service Tax under Works Contract Service will be applicable on Government College i.e Educational Institution which has awarded a contract for construction, renovation and repair of college building to a Contractor.

Further, Whether RCM will be applicable in the said case.

Please advice about the same. 

FCA. P K Agarwal.

Proprietor. 
Pawan Vani & Associates,
Asha Chambers,
Suite No - 23, 1st Floor,
6B, Bentick Street, Kolkata - 700001.
Landline : 033 3329 0188. 

Cell : 98311 04188.

[CA. Lekh Ram Nyoliwala]

Respected Members,

As per my understanding of the concerned notification, only services in relation to education by way “Auxiliary Educational Services” or renting of immovable property is exempted.

“Auxiliary Educational Services” has been defined in the notification as any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge – enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution;

So, in my view , construction, renovation or repair activity under Works Contract does not fit into the above definition so service tax is chargeable.

Though reverse charge applies in case of works contract, reverse charge mechanism is only a mode of collection of service tax. That provision is not a levy of service tax. Thus, if an activity is not chargeable to service tax, no service tax would be payable simply because that activity is covered under definition of works contract.

Regards

Lekh Ram Nyoliwala, 

B.Com (H), A.C.A, DISA ( ICAI )

M/s L. R. Nyoliwala & Co.

Chartered Accountants
Opp. Gurudwara, Sevoke Road, Siliguri - 734001

Phone : (+91) 9832336005
Email : ca.le...@gmail.com

Website : http://lrnyoliwalaco.icai.org.in/

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[ravi...@yahoo.com]

Construction service can not be covered under the definition of
Education auxiliary service.RCM will be applicable
Ravi Sah
Sent from my HTC

[bhartish...@gmail.com]

construction service is not covered under auxillary educational services

[Praveen Ghiria]

Dear Mr. Agarwal,

The Government of India, Ministry of Finance issued a notification no- 25/2012-ST, dated 20^th June,2012 as amended by notification no- 3/2013-ST, dated01^st March,2013 to exempt certain taxable services from the whole of the service tax leviable thereon u/s 66B of the Act.

S. No (9) of this notification specifies following services as exempt-

“Services provided to an educational institution in respect of education exempted from service tax, by way of,-

(a)  auxiliary educational services; or

(b)  renting of immovable property;

The term “educational institution” has not been defined either in the Service Tax Act or in the Mega Exemption Notification. In broader sense, we understand educational institution as places/ centers where education is imparted according to the specific norms and include schools, colleges and institutions of learning.

The definition of “auxiliary educational services” was also given in such notification to mean “any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge-enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Govt., or transportation of students, faculty or staff of such institution’.

Further the Service Tax department has issued a clarification vide CircularNo- 172/7/2013 – ST, dated 19^th September, 2013, to clarify that “all services relating to education are exempt from service tax”. These have been described as “auxiliary educational services” and are defined in the exemption notification. Such services provided to an educational institution are exempt from service tax. For example, if a school hires a bus from a transport operator in order to ferry students to and from school, the transport services provided by the transport operator to the school are exempt by virtue of the exemption notification. It is further clarified that, in addition to the services mentioned in the definition of “auxiliary educational services”, other examples would be hostels, housekeeping, security services, canteen, etc". Works contract is not included either in the notification or in the Circular and works contract activity seems not be directly linked with education. Therefore works contract service provided to the educational institution is not covered under the exemption notification.

For the reverse charge, if the condition is satisfied under the NN - 30/2012 for works contract service, reverse charge will be applicable

In case you require any further clarification please let us know.

Best Regards,

          CA Praveen Kumar Ghiria

          Partner

          P.K. Ghiria & Associates

         112, Narkeldanga Main Road

         Kolkata - 700054

         Phone: 033-40035801

         Mobile: +91 9903752753

         Email: praveen...@gmail.com

On Wed, Mar 12, 2014 at 3:22 PM, Pawan Vani & Associates <pvnasso...@gmail.com> wrote:

[J K Gohil]

Dear Ma'am

According to me, from the above notification its seems the scope of exemption is very limited to the extend of

a) auxiliary educational services; or 

(b) renting of immovable property;”.

if above WCT service fall under above 2 service then you will get exemption.

 

Jatin K Gohil

Contact No. 91+0900 499 4005

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