2025 (9) TMI 261 - AT - Service Tax

Review allowed: institutes deemed Governmental Authority; construction services exempt; contractor must qualify under Sr. No.12A(a) before subcontractor claims Sr.29(h)

Rajendra Mittal Construction Company Private Limited Versus Commissioner of Central Goods and Services Tax, Customs and Central Excise, Alwar (Rajasthan)

Rajendra Mittal Construction Company Private Limited Versus Commissioner of Central Goods and Services Tax, Customs and Central Excise, Alwar (Rajasthan) ... ISSUES PRESENTED AND CONSIDERED 1. Whether NIT, Patna and IIT, Mandi qualify as 'Governmental Authority' under clause 2(s) of Notification No.25/2012-ST as amended. 2. Whether services provided by a main contractor to a 'Governmental Authority' by way of construction, erection, commissioning, installation, repair, maintenance, renovation or alteration of any civil structure are exempt from service tax. 3. Whether the appellant (sub-contractor) is entitled to benefit under Entry No.29(h) of Notification No.25/2012-ST dated 20.06.2012, contingent on the main contractor's (M/s. NBCC) eligibility under Sr. No.12A(a) of amended Notification No.25/2012-ST (w.e.f. 01.03.2016). 4. Whether the Tribunal's remand instructions erroneously required the appellant (sub-contractor) to satisfy conditions applicable to Sr. No.12A(a) which are in fact conditions for the main contractor. ISSUE-WISE DETAILED ANALYSIS Issue 1: Qualification of NIT, Patna and IIT, Mandi as 'Governmental Authority' Legal framework: Clause 2(s) of Notification No.25/2012-ST as amended defines 'Governmental Authority' for purposes of entries providing service tax exemption. Precedent treatment: The Final Order had already considered and held both institutions to fall within the definition; no contrary precedent was invoked or relied upon in the ROM application. Interpretation and reasoning: The Tribunal examined the institutional character and relevant documents and reaffirmed the finding in para-11 that both NIT, Patna and IIT, Mandi are covered as 'Governmental Authority'. The Tribunal relied on the definition in clause 2(s) and the amended notification framework to conclude these bodies qualify. Ratio vs. Obiter: Ratio - the determination that the two institutions are 'Governmental Authority' is essential to the entitlement analysis under the challenged notifications. Conclusion: Both NIT, Patna and IIT, Mandi are 'Governmental Authority' under clause 2(s) of Notification No.25/2012-ST as amended; services provided to them by way of relevant construction activities are within the exempt category subject to other conditions. Issue 2: Exemption for construction-type services to a 'Governmental Authority' Legal framework: Entry No.12A (inserted w.e.f. 01.03.2016) and the broader scheme of Notification No.25/2012-ST list exempt services to Governmental Authorities; Entry No.29(h) of Notification No.25/2012-ST provides exemption for sub-contractors where the main contractor is exempt. Precedent treatment: The parties referenced a High Court decision concerning applicability of conditions inserted by Notification No.09/2016-ST; the Tribunal noted the argument but based its determination on statutory entries and dates of relevant agreements rather than re-adjudicating that precedent's scope. Interpretation and reasoning: The Tribunal interpreted Entry No.12A(a) as creating conditions which must be satisfied by the main contractor for exemption to attach; it clarified that services to a Governmental Authority by way of construction, etc., are exempt, but stressed that Entry No.12A(a) contains specified conditions (e.g., contract entered into prior to 01.03.2015, stamp duty paid where applicable, proviso ceasing applicability after 01.04.2020) which must be examined to determine main contractor's entitlement. Ratio vs. Obiter: Ratio - the requirement that the main contractor satisfy Sr. No.12A(a) conditions before sub-contractor benefits under Entry No.29(h) is central to the decision and remand. Conclusion: Construction-type services to a Governmental Authority are exempt where the main contractor qualifies under Sr. No.12A(a); determination of exemption for the sub-contractor under Entry No.29(h) depends on verification of the main contractor's compliance with Sr. No.12A(a). Issue 3: Entitlement of sub-contractor under Entry No.29(h) dependent on main contractor's eligibility under Sr. No.12A(a) Legal framework: Entry No.29(h) of Notification No.25/2012-ST grants exemption to sub-contractors when the main contractor is exempt from payment of service tax; Sr. No.12A(a) sets conditions for main contractor exemption following its insertion effective 01.03.2016. Precedent treatment: The appellant cited a High Court decision construing applicability of conditions to sub-entries of Sr. No.12A; the Tribunal addressed the argument but confined its rectification to the proper party on whom the Sr. No.12A(a) conditions must be applied, without overruling or distinguishing the cited precedent on its merits. Interpretation and reasoning: The Tribunal recognized an apparent clerical or evident error in the Final Order where remand directions required the appellant (sub-contractor) to demonstrate compliance with Sr. No.12A(a). The Tribunal reasoned that the statutory scheme makes the main contractor the party whose eligibility under Sr. No.12A(a) must be proved, because Entry No.29(h) operates by reference to the main contractor's exemption. The Tribunal therefore corrected the remand to require the Adjudicating Authority to examine whether M/s. NBCC satisfies the Sr. No.12A(a) conditions; only if NBCC is found eligible shall the appellant receive the benefit of Entry No.29(h). Ratio vs. Obiter: Ratio - the rectification that Sr. No.12A(a) conditions are to be examined in respect of the main contractor not the sub-contractor is dispositive and binding for adjudication of entitlement under Entry No.29(h). Conclusion: The appellant's entitlement under Entry No.29(h) is conditional upon a finding that the main contractor satisfies Sr. No.12A(a); remand to the Adjudicating Authority must require verification of the main contractor's compliance with those conditions. Issue 4: Validity of remand directions and rectification of mistake apparent from record Legal framework: Principles permitting rectification of an order to correct an apparent mistake apparent from the record where the error affects the operation of the order. Precedent treatment: No separate authority cited; Tribunal applied its corrective power to rectify the Final Order's remand terms. Interpretation and reasoning: The Tribunal identified that para-12 of the Final Order erroneously directed the Adjudicating Authority to verify conditions of Sr. No.12A(a) in respect of the appellant; since those conditions apply to the main contractor, this was a mistake apparent on the face of the record. The Tribunal amended para-11, para-12 and para-13 accordingly, deleting the misleading sentence and restating remand directions to focus on M/s. NBCC's eligibility. The Tribunal also noted documentary discrepancies (variations in dates between MOUs and work orders) raised by the Respondent as matters for verification by the Adjudicating Authority in the remand proceedings. Ratio vs. Obiter: Ratio - correction of the remand to align the object of verification with the statutory scheme is necessary and forms part of the operative order. Obiter - ancillary observations about date discrepancies serve as guidance for fact-finding but are not dispositive legal holdings. Conclusion: The Final Order contained a clerical/manifest error in ordering the main-contract conditions to be satisfied by the sub-contractor; the error is rectified, the remand reinstated but correctly framed to require examination of the main contractor's compliance with Sr. No.12A(a), and the appeal is allowed to the extent of the rectification and remand.