2025 (2) TMI 745 - SCH - Service Tax

SC Reviews Service Tax Demand on Appellant for Work Contract Services; Clarification Sought on BSNL's Government Status

The SC addressed a service tax demand of Rs.3,75,43,125/- on the appellant for work contract services under the National Optical Fibre Undertaking ... Exemption from service tax - services rendered to a Governmental authority - providing services of work contract services - providing services of laying of cable under or along side the road under the National Optical Fibre Undertaking (NOFN) Project - HELD THAT:- The Customs, Excise & Service Tax Appellate Tribunal, New Delhi took the view that the appellant is not entitled to seek exemption under the Notification which it sought to rely upon. This is a fit case to remand the matter to the original authority only for the purpose of recalculation of the demand extending the benefit of cum-tax on the gross amount charged by the appellant. Issue notice returnable after four weeks. The Supreme Court heard arguments regarding a demand for service tax of Rs.3,75,43,125/- imposed on the appellant for providing work contract services and laying cables under the National Optical Fibre Undertaking Project. The appellant claimed exemption from service tax when providing services to a governmental authority like BSNL. The Customs, Excise & Service Tax Appellate Tribunal rejected the exemption claim but remanded the matter for recalculation of the demand. The Court requested clarification from the respondent on why the appellant asserts exemption based on BSNL's status as an instrumentality of the Central Government. Notice was issued for a future hearing, with additional service permitted.