Construction contract exemption and limitation fail where tender chronology supports pre-cutoff entry and no suppression to invoke extended period.

Construction contracts were treated as eligible for exemption under Notification No. 25/2012-Service Tax where the contemporaneous record showed that the quotation and tender process pre-dated the cutoff date, and the Department failed to rebut that chronology; the demand therefore failed on merits. The Tribunal also held that the extended limitation period was unavailable because the appellant had consistently disclosed its exemption claim, had not collected service tax from the recipient, and the record showed no deliberate suppression or intent to evade tax; the demand was time-barred. Penalty was set aside and consequential relief followed in accordance with law.

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Issues: (i) Whether the appellant's construction contracts were covered by the exemption under Notification No. 25/2012-Service Tax dated 20.06.2012 on the footing that the contract had been entered into before the relevant cutoff date; (ii) Whether the demand was barred by limitation in the absence of suppression or wilful intent to evade tax.

Issue (i): Whether the appellant's construction contracts were covered by the exemption under Notification No. 25/2012-Service Tax dated 20.06.2012 on the footing that the contract had been entered into before the relevant cutoff date.

Analysis: The tender papers showed that the quotation was submitted on 09.02.2015 and the final contract award followed after evaluation of bids. The Tribunal accepted the chronology placed on record and held that, for the purpose of the exemption entry, the contract had to be treated as one entered into prior to 01.03.2015. The Department did not produce material to dislodge the appellant's version, and the denial of exemption based only on the formal award date was held to be too narrow.

Conclusion: The exemption applied, and the confirmed demand failed on merits.

Issue (ii): Whether the demand was barred by limitation in the absence of suppression or wilful intent to evade tax.

Analysis: The record showed that the appellant had consistently communicated its claim to exemption to the department and had not shown any collection of service tax from the recipient. On those facts, the Tribunal found a bona fide belief that tax was not payable and no material indicating deliberate suppression or intent to evade. In such circumstances, the extended period could not be invoked.

Conclusion: The demand was time-barred and the extended period was not available to the Revenue.

Final Conclusion: The appeal succeeded on both exemption and limitation, with the demand and penalty set aside and consequential relief left to follow in accordance with law.

Ratio Decidendi: Where the contemporaneous record supports a bona fide belief that the activity is exempt and the Department fails to prove deliberate suppression or evasion, the exemption cannot be denied on a narrow reading of the cutoff condition and the extended period of limitation is unavailable.

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