CAG Rips Apart VCES

Notification No.06/2014-ST dated 11.07.2014 providing exemption from payment of Service Tax in respect of auxiliary educational services provided by an educational institution with effect from 11.07.2014 and as such restored the exemption which was in effect upto 31.03.2013. In respect of exemption for the intervening period of 01.04.2013 to 11.07.2014, recourse can be taken in the light of Hon’ble Supreme Court’s judgement in the case of in the case of WPIL Ltd Vs Commissioner of Central Excise, Meerut, UP [ 2005 ( 181) ELT 359 (SC) ] to examine whether the said services should be chargeable to Service Tax during the intervening period i.e., 01.04.2013 to 11.07.2014. In the said decision, Hon’ble Apex Court has held that

“Exemption withdrawal and its reinstitution - Effect - Parts used in manufacture of power driven pumps - Omission from Notification No. 46/94-C.E., dated 1-3-1994 - Reinstatement of exemption by Notification No. 95/94-C.E., dated 25-4-1994 - Since it was a consistent policy of Government to grant exemption to such parts, by their omission from former notification it could not be said that their exemption was withdrawn - Later notification did not grant the exemption for first time, it was only clarificatory and hence retrospective - Therefore for period intervening between the two notifications no duty could be demanded on these parts. [paras 14, 15, 16]

Interpretation of statutes - Clarificatory notification - Merely clarifies position and makes explicit what was implicit - It takes effect retrospectively. [para 15]

C V Ramana 18/08/2016