TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1669
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....g to Rs. 49,66,151/- (Rupees Forty Nine Lakhs Sixty Six Thousand One Hundred Fifty One Only) under Section 73(2) of the Finance Act, 1994 & order to recover the same from the Party. As the party has already deposited Rs. 32,43,137/-, I order appropriation of the said amount against the demand of Rs. 49,66,151/-. (iii) I order for recovery of interest from the Party involved on the aforesaid confirmed amounts in Para (i) & (ii) under Section 75 of the Finance Act, 1994. (iv) I impose penalty of Rs. 3,08,89,608/- (R. 259,23,457/- Rs. 49,66,151/-) (Rs. Three Crores Eight Lakhs Eighty Nine Thousand Six Hundred Eight Only) on the party under Section 78 of the Finance Act, 1994 (v) I further impose a penalty of Rs. 10,000/- (Rs Ten Thousand Only) on the party under Section 77 (1) (b) of the Finance Act, 1994 as they fail to keep, maintain or retain books of accounts and other documents as discussed supra. (vi) I further impose a penalty of Rs. 10,000/- (Rs Ten Thousand Only) on the party under Section 77 (1) (c) of the Finance Act, 1994 as they fail to furnish information as called by the officers. (vii) I further impose a penalty of Rs. 10,00....
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.... and for today i.e.18.07.2025. The Counsel for the appellant either in person or through the letter has only sought for taking adjournments in the matter. Proviso to Section 35C (1A) of the Central Excise Act, 1944 provides as follows- "35C. Orders of Appellate Tribunal.- (1A) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal." RULE 20 of CESTAT Procedure Rules, 1982 provide as follows:- Action on appeal for appellant's default. - Where on the day fixed for the hearing of the appeal or on any other day to which such hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may, in its discretion, either dismiss the appeal for default or hear and decide it on merits : Provided that where an appeal has been dismissed for default and the appellant appears afterwards and satisfies the Trib....
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....nt, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators, or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry, or (c) construction of a new residential complex or a part thereof, or (d) completion and finishing services, repair, alteration, renovation or restoration of or similar services, in relation to (b) and (c), or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects. 5.4.2 Further, Section 55B of the Finance Act, 1994 explains works contract as a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, com....
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....for payment of the service tax (total Rs 25:12.740/). 5.6 Now I will discuss the liability of the service tax on construction of electric sub-station and lying of cable for NOIDA and Ghaziabad Development Authority (GDA). It has been submitted by the party that the sub-station so constructed by them for NOIDA is used by the UPPCL (Uttar Pradesh Power Corporation Limited) which is an undertaking of Uttar Pradesh Govemment. The UPPCL is responsible for planning and managing the power sector through transmission, distribution and supply of electricity, which is a basic amenity. The objective of the UPPCL is to serve the people and fulfill the social needs of general public and not to make any profit. Thus, UPPCL is non-commercial in nature and as a result construction service provided is outside the purview of the Finance Act, 1994. I find that the contention of the party is misplaced and incorrect. I have gone through the official web-site of the UPPCL i.e. ww.uppcl.org which reads as under. "UPPCL will be professionally managed utility supplying reliable and cost efficient electricity to every citizen of the state through highly motivated employees and sta....
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....me 2013. From this fact, it is evident that the party was also of the view that they were liable to pay the service tax on the laying of cable for the GDA but they did not deposit service tax on the same. It is observed that while contesting the taxability of the work related to NOIDA or GDA, the party has mainly contended that all the activities undertaken for these authorities are not in relation to Commerce or industry, hence not taxable. I observe that there is no bar if the Noida or GDA undertake activity in relation to commerce and these authorities have constructed several commercial establishments primarily for purpose of commerce. Thus, though most of the activity got executed by the NOIDA/GDA may not be commercial in nature yet still there may be some projects which are commercial in nature. In the instant case, construction of sub-station and lying of cables are for electricity department. I observe that electricity department ie. Uttar Pradesh Power Corporation Ltd. is a commercial concern engaged in production and distribution of electricity to public at large as well as to commerce and industry also. The party has failed to explain as to how this project can ....
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....cal works or pumping stations and like activity, is classifiable only under Commercial or Industrial Construction Service (CICS) for the period up to 1-6-2007 and not under Erection, Commissioning or Installation Service (ECIS); (b) Issues (B), (C) and (D) : (i) Construction of canals for irrigation or water supply; construction or laying of pipelines/conduits for lift irrigation conceived and integrated into a dam project, must be classified as works contract "in respect of dam" and is thus excluded from the scope of "Works Contract Service" defined in Section 65(105)(zzzza) of the Act, in view of the exclusionary clause in the provision; (ii) Turnkey/EPC project contracts, enumerated in clause (e), Explanation (ii) in Section 65(105)(zzzza) of the Act is a descriptive and ex abundant cautela drafting methodology. In the light of the decision in Alstom Projects India Ltd., fortified by the Special Bench decision (dated 19-3-2015) in Larsen & Toubro Ltd. reference, a turnkey/EPC contract is taxable prior to 1-6-2007 as well. On and since 1-6-2007, turnkey/EPC contracts must be classified on the basis of the essential character of the service provided ther....
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....nt vis-à-vis for the period prior to that, would not be applicable in the present case. The demand has been confirmed holding that these services are not exempted as per the notification no.24/2009-ST dated 21.07.2009, 54/2010-ST dated 21.12.2010 and 31/2010-ST dated 22.06.2010 these notifications exempted service tax on management, maintenance, repair of roads, certain services when provided within a port or an airport and the services provided by the appellant are associated with supply of materials and in terms of decision of Hon'ble Supreme Court in the case of Larsen and Toubro Ltd. v. Additional Deputy Commissioner of Commercial Taxes and Anr., reported in 2016-TIOL-155-SC-VAT would qualify as Work Contract Services. Impugned order records that Work Contract Services provided to government authorities are exempt from payment of service tax but the said exemption is not applicable on certain specific work contract services. The services provided by the appellant to the Noida are not within the said category. Appellant has also relied upon the decision in the case of M/s Jyoti Buildtech (P) Ltd. Vs CCE & ST, Noida 2017 (3) GSTL 116 (Tri.-All.) to argue that these service....
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....sion of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provision of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/ public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities. However, if such authority performs a service, which is not in the 3. nature of statutory activity and the same is undertaken for consideration not in the nature of statutory fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service." 7. As per the exemption circular only such activities performed by the sovereign/public authorities under the provisions of law being mandatory and statutory functi....
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....ould be adopted is concerned, the said principle shall not be applicable to construction of an exemption notification, when it is clear and not ambiguous. Thus, it will be for the assessee to show that he comes within the purview of the notification. Eligibility clause, it is well settled, in relation to exemption notification must be given effect to as per the language and not to expand its scope deviating from its language. Thus, there is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification. 9. In the present case, it is the case on behalf of the appellants that the activity of rent/lease/allotment of shop/land/platform/space is a statutory activity and the Market Committees are performing their statutory duties cast upon them under Section 9 of the Act, 1961 and therefore they are exempted from payment of service tax on such activities. The aforesaid submission seems to be attractive but has no substance. Section 9(2) is an enabling provision and the words used is "market committee may". It is to be noted that in so far as sub-section (1) of Section 9 is concerned, the word used is "shall". Therefore, ....
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....ich is collected shall be deposited with the Government Treasury and therefore also the Market Committees are exempted from payment of service tax is concerned, it is to be noted that on fair reading of Rule 45, the amount of fee so collected on such activities - rent/lease shall not go to the Government. Rule 45 provides how the money received by the Market Committees shall be invested and/or deposited. It provides that all money received by the Market Committee shall be credited to the fund called the Market Committee Fund. It further provides that all money paid into the Market Committee Fund shall be credited once a week in full into Government Treasury or sub-treasury, or a bank duly approved for this purpose by the Director and all balance from the fund shall be kept in such treasury or sub-treasury or bank and it shall not be withdrawn except in accordance with the Rules. Therefore, it does not provide that on deposit of the money received by the Market Committees into the Government Treasury/sub-treasury or a bank duly approved, it ceases to be the Market Committee Fund. It will continue to be the Market Committee Fund. Even it is the case on behalf of the appellants that t....
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.....] 5.1 Furthermore, in support of this very submission, our attention is drawn by Mr Gautam to Article 243W of the Constitution. 5.2 The said provision of the Constitution, inter alia, alludes to the powers, authority and responsibilities of municipalities. 5.3 In particular, Mr Gautam adverts to sub-clause (ii) of clause (a) of Article 243W of the Constitution. 5.4 Based on the said provision, it is emphasised that respondent no. 1/MCD is empowered to perform functions and implement schemes which are entrusted to it, including those in relation to matters, listed in the Twelfth Schedule of the Constitution. 5.4. (a) The Twelfth Schedule of the Constitution, inter alia, refers to roads and bridges, as also public amenities including street lighting, parking lots, bus stops and public conveniences. (See items 4 and 17 of the Twelfth Schedule.) 5.5 It is, therefore, the contention of Mr Gautam that the omnibus expression "management, maintenance or repair of roads", adverted to in the 2009 Notification, as noted above, would include the functions entrusted to respondent no. 1/MCD, of maintaining street lights. 8.6 Althoug....
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....o.25/2012 dated 20-6-2012 Service provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion fitting out, repair maintenance, renovation, alteration of:-a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession. "Original Works" means (i) all new construction; (ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable (iii) erection, commissioning or installation of plant machinery or equipment or structures, whether pre fabricated or otherwise (Notification No. 24/2012 - Service Tax, dated 6th June 2012 refers). Not applicable as street light is not covered in the definition of original works. Advance Ruling Authority vide Ruling No. AAR/ST/09/2015 dated 28th August 2015 also observed same i.e. maintenance of street lights is not covered by entry no. 12A of Notification No. 25/2012- Service Tax. 4. That there is no exemption available for the services by way of maintenance of street lights provided to a local authority by an....
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....ort), Mumbai v. Dilip Kumar and Company and Ors., (2018) 9 SCC 1/[2018] 95 taxmann.com 327/69 GST 239/2018 (361) E.L.T. 577 (S.C.). For the sake of convenience, the relevant part of the said judgment is extracted hereafter: "66. To sum up, we answer the reference holding as under: 66.1 Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. 66.2 When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. 66.3 The ratio in Sun Export case is not correct and all the decisions which took similar view as in Sun Export case stand overruled." 11.2 Also see the following judgments: Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar v. Commissioner of Central Excise and Service Tax, Alwar, [2022] 5 SCC 62 = 2022 (58) G.S.T.L. 129 (S.C.)/135 taxmann.com 354 (S.C.); Commissioner of Customs, Bangalore v. GE BE Ltd. and Anr., [2016] 15 SCC....
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....Noida and Ghaziabad Development Authority. Impugned order records that the said services have been provided to M/s UPPCL which is an undertaking of Uttar Pradesh Government and is in nature of a commercial concern as it has been held that the submissions of the appellant that these services were provided to appellant do not dispute that these services were provided for UPPCL. In his submission they have themselves stated that UPPCL is charging certain amount in levy of providing services. For the period post to 01.07.2012 appellant have relied upon Notification No.25/2012-ST dated 02.06.2012, Sl.No.12 of the said notification provides as follows:- "12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of- (e) Pipeline, conduit or plant for (i) water supply, (ii) water treatment, or (iii) sewerage treatment or disposal;" 4.12 Appellant has further contended that in respect of services provided to Ghaziabad Development Authority for construction of roads etc., the main contractor was M/s R P Electr....
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..... As noticed above, there can be no possibility of double taxation because the Cenvat Rules allow a provider of output service to take credit of the Service Tax paid at the preceding stage. 16. It is in this light that the main contention of Learned Counsel for the Respondent that if a sub-contractor is required to pay Service Tax when the main contractor has actually discharged Service Tax liability, it would amount to 'Double Taxation', has to be examined. For this contention, reliance has been placed by the Learned Counsel for the Respondent on the following decisions of this Tribunal : (i) Urvi Construction v. Commissioner of Service Tax, Ahmedabad, reported in 2010 (17) STR 302 (Tri. - Ahmd.); (ii) BCC Developers and Promoters Pvt. Ltd. v. Commissioner of Central Excise, Jaipur, reported in 2017 (52) S.T.R. 22 (Tri. - Del.); (iii) M/s. Dhaneshra Engineering Works v. Commissioner of Central Excise, Allahabad, reported in 2018 (2) TMI 788 - CESTAT - Allahabad; (iv) Power Mech Projects Ltd. v. Commissioner of Customs, Guntur, reported in 2017 (48) S.T.R. 165 (Tri.- Hyd.); and (v) M/s. Edac Engg. Ltd. v. CST, Chennai, reported ....
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.... in the case of the present appellants Edac Engineering Ltd. in Final order dated 19-12-2016. We also find that the very same Board's Circular No. 97/8/2007-S.T., dated 23-8-2007, relied upon by the Ld. AR has been taken note of by the Tribunal in Urvi Construction (supra). This being so, we have no hesitation in ruling that when Service Tax has been paid by the main contractor, charging the subcontractor again will amount to taxing the same service twice. In the circumstances, the issue at hand also requires to be remanded to the adjudicating authority to verify whether the service rendered by the appellant has suffered tax in the hands of the principal contracts. If that aspect is able to be proved by the appellants, no tax liability will accrue to them. Towards this end, the adjudicating authority will give suitable opportunity to the appellants to present their case. Appellants are also produce all evidence and documents to establish their claim that the tax liability required to be discharged by them has already been paid up by the main contractor. If that is provided, their will obviously be no demand for interest unless such demands have been made belatedly. Once this aspect....
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....ovision of such service.........." 25. Similar views were taken by the Tribunal in (i) Max Logistics Ltd. v. Commissioner of Central Excise, Raipur, reported in 2017 (47) S.T.R. 41 (Tri. - Del.); (ii) Hargovind Electric Decorators v. Commissioner of Central Excise, Jaipur-I, reported in 2016 (43) S.T.R. 619 (Tri. - Del.); and (iii) Sew Construction Ltd. v. Commissioner of Central Excise, Raipur, reported in 2011 (22) S.T.R. 666 (Tri. - Del.). 26. At this stage, it would also be useful to refer to a Larger Bench decision of the Tribunal in Vijay Sharma & Company v. CCE, Chandigarh, reported in 2010 (20) S.T.R. 309 (Tri. - LB). The issue that arose before the Larger Bench was as to whether service provided by a sub-broker are covered under the ambit of Service Tax and taxable or not. After noticing that a sub-contractor is liable to pay Service Tax, the Larger Bench examined as to whether this would result in double taxation if the main contractor has also paid Service Tax and observed that if service tax is paid by a sub-broker in respect of same taxable service provided by the stock broker, the stock broker is entitled to the credit of the tax so paid in view of t....
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....nsel for the Respondent has, however, relied upon the decision of the Supreme Court in Larsen and Toubro Ltd. v. Additional Deputy Commissioner of Commercial Taxes and Anr., reported in 2016-TIOL-155-SC-VAT. In this case, the contracts which were secured by the Appellant therein were works contract and a part thereof was assigned to the sub-contractor who had submitted returns and paid taxes for the execution of the works contract. During the course of the assessment, the Appellant submitted that the sub-contractors had already been taxed and, therefore, the Appellant cannot be taxed again under Section 6B of the Karnataka Sales Tax Act. The submission, therefore, was that the value of the work entrusted to the sub-contractors could not be taken into account while computing the total turnover of the Appellant for the purpose of taxation under the Karnataka Sales Tax Act. It is in view of the provisions of the Karnataka Sales Tax Act that the Supreme Court observed that the value of the work entrusted to the sub-contractors or payments made to them shall not be taken into consideration while computing total turnover for the purposes of Section 6B of the Karnataka Sales Tax Act. This....
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....w. Party Demand proposed Service Tax paid Solitaire Realinfra Pvt. Ltd. 21,36,402 21,36,402 Sahni Arcades 17,16,854 17,46,291 Pary Developers 11,12,895 11,12,895 Total 49,66,151 49,95,588 4.14 We find that the impugned order itself appropriates an amount of Rs.49,66,151/- that appellant have paid. There may be some variations in the amount appropriated and explanation by the appellant (whatsoever is exact payment made as per the challan). The demand in respect of other heads, appellant has pointed out some minor differences. However, these are the payments made in respect of the services provided to M/s Infratech Royalty. In respect of S.S. Infra impugned order records as follows:- "5.8 Now I take up the issue of construction of residential flats and offices by the party to various parties other than the government authorities such as M/s Solitaire Realinfra Pvt. Ltd., M/s Sahni Arcade and M/s Pary Developers. The party was engaged in the construction services and they already accepted their service tax liability on the services provided to these parties and claimed to have deposited the entire service tax liability of Rs. 49....
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....ility on the services provided to various government authorities, as they have already opted for VCES scheme for payment of service tax on the laying of electric cables for Ghaziabad Development Authority." 4.17 It is a fact that appellant was providing services from the premises other than the registered premises, in fact they had stopped all the activities at the registered premises but they never brought these facts to the knowledge of the department. It is also noted at the time of search of the registered premises of the appellant on 02.02.2015, not a single document relating to the appellant activities was found in the said premises, and the said premises was being used by another person namely M/s Solitaire Realinfra Pvt. Ltd. A sister concern of the appellant. The appellant intention to evade payment of service tax is thus evident. The appellant have claimed that they were under bonafide belief that service tax would not be leviable in respect of these activities, but have failed to establish and provide evidence, in respect of entertaining such belief. It is fact on record that in respect of certain services provided to GDA appellant had declared their tax liability und....
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....tion that the Appellant had bona fide belief of for non-payment of tax, so as to invoke Section 80 of the Act." This decision has of Mumbai Bench has been affirmed by Hon'ble Supreme Court as reported at [(2023) 6 Centax 210 (S.C.)] 4.18 In case of Bharat Bijlee Ltd [2014 (314) E.L.T. 74 (Tri. - Mumbai)] Mumbai Bench observed as follows: 5.15 The argument of the bona fide belief raised by the appellant does not seem to be convincing. If the appellant is claiming bona fide belief, it is for them to establish that they were entitled to hold such a belief based on interpretation of law as pronounced by any judicial fora. In the case before us we do not find any reason for entertaining such a belief nor any judicial pronouncement to hold such belief has been cited before us. Bona fide belief is not blind belief. In the case of Andhra Pradesh Electricity Board [1984 (16) E.L.T. 579 (Tri.)], this Tribunal held that bona fide belief does not mean blind belief or a self-opinionated belief. It would imply a belief which has been reached after a sincere attempt to understand the issue and examining it reasonably. Similarly, in the case of Inter Scape [2006 (198) E.L.T. 275 (Tr....
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....that the work order was to carry out the job for furniture also. A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years." Following the ratio of the aforesaid decision, in the present case also, the show cause notice is well within the time period of five years and accordingly the demand and interest thereon is sustainable and consequently penalty under Section 11A is also sustainable. 4.20 In case of Dr. Smita's Herbal Laboratories [2022 (381) E.L.T. 784 (Tri. - Mumbai)] Mumbai Bench observed as follows 19. The appellants have submitted that it was their bona fide belief that they are eligible for the benefit of the Notification No. 8/2003 and as such extended period cannot be invoked. On the other hand the Learned Authorized Representatives for the Department submit that the appellants were availing SSI benefit and have n....
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.... not maintaining the records in prescribed manner, determining the and depositing the service tax by the due date and by not filing the appropriate returns declaring their correct service tax liability penalty under these provisions are justified and upheld. Penalties under Section 77 are not for the contumacious conduct but for the contravention of the provisions of statute and hence cannot be faulted. In case of Gujarat Travancore Agency [1989 (42) E.L.T. 350 (S.C.)] Hon'ble Supreme Court has held as follow: "4. Learned Counsel for the assessee has addressed an exhaustive argument before us on the question whether a penalty imposed under section 271(1 )(a) of the Act involves the element of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in order to demonstrate that the proceedings by way of penalty under section 271(1 )(a) of the Act are quasi criminal in nature and that, therefore, the element of mens rea is a mandatory requirement before a penalty can be imposed under section 271(1 )(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them w....
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.... 5. Accordingly, we hold that the element of mens rea was not required to be proved in the proceedings taken by the Income-tax Officer under section 271(1)(a) of the Income-tax Act against the assessee for the assessment years 1965-66 and 1966-67." 4.23 Since appellants have not paid the service tax leviable by the due date the demand for interest under section 75 of Finance Act, 1994 is justified. In case of P.V. Vikhe Patil SSK [2007 (215) E.L.T. 23 (Bom.)] Hon'ble Bombay High Court has stated as follows : "10. So far as interest u/s. 11AB is concerned, on reference to text of Section 11AB, it is evident that there is no discretion regarding the rate of interest. Language of Section 11AB(1) is clear. The interest has to be at the rate not below 10% and not exceeding 36% p.a. The actual rate of interest applicable from time to time by fluctuations between 10% to 36% is as determined by the Central Government by notification in the Official Gazette from time to time. There would be discretion, if at all the same is incorporated in such notification in the gazette by which rates of interest chargeable u/s. 11AB are declared. The second aspect would be w....