CESTAT Denies Service Tax Exemption on Rent to Educational Institution for Lack of Evidence

The CESTAT has denied a service tax exemption on property rented to an educational institution due to insufficient evidence. The tribunal found that the lease agreement did not definitively prove the tenant was an educational institution and that the permitted use of the property was not exclusively for educational activities. A later certificate from a university was also rejected as it was issued after the relevant period and the university was not the lessee. The tribunal emphasised that the burden of proof for claiming exemptions lies with the assessee.

The appellant had rented an immovable property to Ritnand Balved Education Foundation and claimed exemption from service tax on the ground that the premises were being used by an educational institution for imparting education.

The Tribunal observed that the lease deed did not establish that the lessee was an educational institution. Further, the permitted usage included office/commercial use, education, counselling, research and hostel, and not exclusively educational activities. A subsequent certificate from Amity University was also not accepted since Amity University was not the lessee and the certificate was issued after the impugned order.

CESTAT held that the burden of proving eligibility for an exemption lies on the assessee and exemption notifications must be strictly interpreted. Since the appellant failed to establish that the premises were rented to an educational institution for eligible educational purposes, the exemption was rightly denied.

On the issue of limitation, the Tribunal held that invocation of the extended period requires a positive act indicating an intention to evade tax. However, in the present case, the appellant's claim of bona fide belief was not accepted. The extended period was therefore upheld, although the portion of the demand falling beyond five years was set aside. The remaining demand was confirmed and the penalty was proportionately reduced.

Key Takeaway:
For claiming service tax exemption on renting of premises to an educational institution, the assessee must produce clear documentary evidence establishing both the status of the tenant as an educational institution and the eligible use of the premises. Mere subsequent certificates or references to educational activities may not be sufficient.

This AI-generated summary is for informational purposes only. Please view attached original judgment for the complete text and authoritative interpretation.