Custom, Excise & Service Tax Tribunal
Rajasthan State Agriculture Marketing ... vs Principal Commissioner Of Cgst And ... on 2 June, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH-COURT NO. 4
SERVICE TAX APPEAL NO. 52956 OF 2019
[Arising out of Order-in-Appeal No. 321(CRM)/ST/JPR/2019 dated
13.09.2019 passed by the Commissioner (Appeals) Central Excise & CGST,
Jaipur]
RAJASTHAN STATE AGRICULTURE
.......APPELLANT
MARKETING BOARD
Pant Krishi Bhawan,
C-Scheme, Jaipur
Vs.
COMMISSIONER CGST & CENTRAL
EXCISE -JAIPUR ......RESPONDENT
RAJASTHAN
Appearance:
Present for the Appellant : Shri Rahul Lakhwani, Advocate
Present for the Respondent: Shri Shashank Yadav, Authorised
Representative
CORAM:
HON'BLE DR. RACHNA GUPTA, MEMBER ( JUDICIAL )
HON'BLE MR. P. V. SUBBA RAO, MEMBER ( TECHNICAL )
FINAL ORDER NO. 50814 /2025
Date of Hearing : 10/03/2025
Date of Decision :02/06/2025
P. V. SUBBA RAO
The Rajasthan state agriculture marketing board1 filed this
appeal to assail the Order-in-Appeal dated 13.09.20192 passed
by the Commissioner (Appeals) upholding the order dated
03.07.2018 passed by the Assistant Commissioner, confirming
1 Appellant
2 Impugned order
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ST/52956/2019
demand of ₹14,23,657 under section 73 (2) of the Finance Act,
19943 along with interest under section 75 of the Finance Act and
imposed penalties under section 77 and 78 of the Finance Act on
the Appellant.
2. The appellant is a board created under section 22-A of the
Rajasthan Agricultural Produce Markets Act, 1961. The appellant
had issued following three work orders to M/s. Laxmi Narayan
Agarwal4, the service provider.
a) Work Order No. P-33 (Works) I/13-14/1745-55 dated
1.10.2013 for construction of two auction platforms
covered with CGI sheet at Mahdi Phalodi
b) Work Order No. 1102 dated 7.11.2016 for construction of
self supporting roofing work over internal roads of Block B
at Terminal Market, Muhana- Package 04/2016-17
c) Work Order no. 1118 dated 7.11.2016 for construction of
self supporting roofing work over internal roads of Block B
at Terminal Market Muhana- Package -03/2016-17
3. Neither the service provider nor the appellant paid any
service tax on these services. The Service provider was however,
registered with the Service tax department. Receiving intelligence
that the service provider had rendered taxable services and had
not paid service tax on them, the officers initiated an
investigation, issued several summons to the service provider
and obtained details of the services provided by him.
3 Finance Act
4 Service Provider
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ST/52956/2019
4. The submission of the service provider during investigation
was that the services provided to the appellant were exempted
by Notification No. 25/2012-ST dated 20.6.2012 clause 12(a) and
therefore, no service tax was required to be paid. The relevant
portion of the notification reads 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-
(a) a civil structure or any other original works meant
predominantly for use other than for commerce, industry
or any other business or profession;"
5. It was further found during investigation that in respect of
some notified services, service tax had to be paid by the service
recipient to the extent indicated in the notification. As per
Notification no. 30/2012-ST dated 20.6.2012 (entry no. 9), "in
respect of service provided or agreed to be provided in service
portion in execution of works contract" the service provider and
the service recipient had to pay 50% each of the service tax.
Since the appellant was the service recipient but had not paid
50% of the service tax on the aforesaid works contracts, a Show
Cause Notice dated 2.2.20185 was issued to the appellant which
culminated in the order of the Assistant Commissioner which has
been upheld in the impugned order by the Commissioner
(Appeals).
Submissions of the appellant
6. Learned counsel for the appellant made the following
submissions:
5 SCN
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ST/52956/2019
(i) The Assistant Commissioner is appointed under CGST Act
and hence had no jurisdiction to decide the matter
pertaining to the Service Tax.
(ii) The services were exempted from service tax by Notification
No. 25/2012-ST dated 20.6.2012 (as amended) [S.No.
14(d)] which reads as follows:
14. Services by way of construction, erection, commissioning or
installation of original works pertaining to,-
(a)
(b)
(c)
(d) post-harvest storage infrastructure for agricultural
produce including cold storage for such purposes;
******
(iii) As per Rule 2A of the Service Tax (Determination of Value) Rules, 2006, all new constructions are considered original works. The platform work and roofing are original works. The platform and roof work was done in the mandi. The mandi serves as a storage facility for agricultural produce brought by farmers after harvesting, where the goods are stored until they are sold or auctioned.
(iv) The platform work involves constructing auction platforms covered with CGI sheets which provides space for the storage of agricultural products before they are sold.
(v) Roofing work is carried out for internal roads where trucks and other vehicles loaded with agricultural produce are parked until the goods are unloaded or sold.
(vi) Therefore, all the structures were exempted by Notification no 25/2012-ST dated 20.6.2012 [S.No. 14(d)]. 5
ST/52956/2019
(vii) The Commissioner (Appeals) erred in denying the benefit of the exemption notification.
(viii) The SCN is time barred as the notice has been issued beyond 18 months from the last date for filing the returns, i.e., 25.4.2016 and the SCN was issued only 2.2.2018.
(ix) Extended period of limitation is not invocable as there is no evidence of malafide. No malafide can be presumed because the appellant is a government organisation.
(x) As per Article 12 of the Constitution of India, the term 'State' includes the Government, Parliament, State Governments and all other local authorities. Therefore, the appellant should be considered 'State'.
(xi) The mandis and yards are set up by the appellant to serve public at large and therefore, they are exempted by entry no. 13 (a) of Exemption notification no. 25/2012-ST dated 20.6.2012 [S.No. 13(a)] which reads as follows.
13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-
(a) a road, bridge, tunnel or termination for road transportation for use by general public;
(xii) The Commissioner (Appeals) wrongly upheld the confirmation of the demand.
(xiii) The impugned order may be set aside and the appeal may be allowed.
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ST/52956/2019 Submissions of the Revenue
7. Learned authorised representative for the Revenue vehemently supported the impugned order and asserted that it calls for no interference.
Findings
8. We have considered the submissions on both sides and perused the records. The undisputed facts are that the appellant is body corporate created by the Government of Rajasthan to perform certain functions. As a part of these functions, it developed auction platforms covered with CGI sheets and provided roofs over internal roads in the mandis.
9. The first submission of the appellant is since the Assistant Commissioner is the Assistant Commissioner of CGST, he had no jurisdiction to issue the SCN or to pass an order in respect of service tax. We must point out that when the Goods and Services Tax was introduced, several taxes and duties including the Service Tax and the Central Excise Act were subsumed in it. The erstwhile laws (including the Finance Act, 1994 under which Service Tax was levied) were repealed. While repealing the Finance Act, 1994 and other Acts, several actions, rights, privileges, obligations, etc. under the repealed Acts were also saved. Sections 173 and 174 of the CGST Act, 2017 deal with the subject and they reads as follows:
"Section 173. Amendment of Act 32 of 1994. Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be omitted."7
ST/52956/2019 Section 174. Repeal and saving.
(1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), and the Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as the repealed Acts) are hereby repealed. (2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (32 of 1994) (hereafter referred to as "such amendment" or "amended Act", as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not--
(a) revive anything not in force or existing at the time of such amendment or repeal; or
(b) affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts:
Provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or
(d) affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or
(e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed; or 8 ST/52956/2019
(f) affect any proceedings including that relating to an appeal, review or reference, instituted before on, or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed.
(3) The mention of the particular matters referred to in sub-
sections (1) and (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal."
10. After the Finance Act, 1994 was repealed, if actions relating to rights, privileges, obligations or liabilities which had accrued before the repeal have be taken, the very officers who were authorised to take them before the repeal can take such actions. In other words, it is the successor officers who have to carry on the functions under the repealed acts to the extent they are saved. CGST officers are successors of the service tax and the jurisdictional officers can and must take such actions. The challenge of the jurisdiction of the Assistant Commissioner by the learned counsel is an account of the fact that he had not considered the savings clause of the CGST Act. If the learned counsel's submissions are accepted, it will result in utter chaos and confusion. For instance, if any assessee succeeds in service tax appeal and has to get consequential relief, if the CGST officers are held to be not authorised under Service Tax law, nobody can grant refund to the assessee because there are no more any service tax officers. This submission of the learned counsel on the question of jurisdiction deserves to be rejected and is rejected.
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ST/52956/2019
11. We now consider the submission of the learned counsel that the appellant should be considered as 'State' in view of Article 12 of the Constitution. Article 12 reads as follows:
PART III FUNDAMENTAL RIGHTS General
12. In this Part, unless the context otherwise requires, "the State'' includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.
(emphasis supplied)
12. Learned counsel completely misunderstood the scope of the definition of 'State' under Article 12. It is meant for only Part III (Fundamental Rights) of the Constitution and that too unless the context otherwise requires. This part deals with the fundamental rights and places certain restrictions on what the State cannot do and for this purpose, the definition of 'State' shall be as per Article 12. This definition does not apply even to other parts of the Constitution itself, for instance, Part VI which deals with the States. Nothing in Article 12 suggests that it would apply to all laws and notifications in the country. Learned counsel placed the definition in Article 12 completely out of context. In this appeal, the dispute is about the liability of tax. There no is dispute about or interpretation of any fundamental rights. This submission of the learned counsel due to his misunderstanding of the scope of Article 12 needs to be rejected.
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13. The next submission of the learned counsel is that the services were exempted by Notification No.25/2012-ST [S.No. 12
(a)]. The relevant portion of the notification reads 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-
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession;"
14. The above notification exempts services by way of construction of a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession. The three structures viz., the auction platforms and the roofs over the internal roads were constructed in mandis or market places. There cannot be any doubt that these structures are meant for business and commerce. Mandis or market places are meant for business only and nothing else. To suggest that these are not meant for business or commerce is preposterous. Therefore, the services received by the appellant are clearly not covered by S.No. 12(a) of Notification no. 25/2012-ST.
15. Another submission of the appellant is that roofs over the internal roads within the market or mandis should be considered as roads meant for use by general public and hence they were exempted by S.No. 13(d) of the notification no. 25/2012-ST. 11
ST/52956/2019
13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-
(a) a road, bridge, tunnel or termination for road transportation for use by general public;
16. We find that what is in dispute is not the construction of the road but a roof over it. These are not roads for use by general public but are clearly roads for use by those who go to buy or sell goods in the mandi. Therefore, nothing in S.No. 13(a) covers the services received by the appellant.
17. An alternative claim of the appellant is that the services which it had received were exempted by Notification no. 25/2012-ST [S.No. 14(d)]. It reads as follows:
"14. Services by way of construction, erection, commissioning or installation of original works pertaining to,-
(a)
(b)
(c)
(d) post-harvest storage infrastructure for agricultural produce including cold storage for such purposes;"
18. The submission of the learned counsel is that since the goods which are brought to the mandis for auction are kept on the auction platform before they are sold, the auction platform should be considered as post harvest storage infrastructure. Insofar as the roads are concerned, since the trucks stop on the 12 ST/52956/2019 internal roads with the agricultural produce until the goods are unloaded or sold it is his submission that the roads should also be considered as storage infrastructure.
19. These submissions of the learned counsel deserve to be rejected. Market is not a place of storage but a place where goods are sold and bought. Of course, when they are to be sold, they will be brought to the market and until they are sold, they are kept in the market but that does not make the market a place of storage. The auction platform, for instance, as the name suggests, is for auctioning the produce. Simply because the produce is kept on the platform until it is sold, the platform does not become a place of storage. Similarly, internal roads of mandis are meant for movement of goods and vehicles carrying them. Vehicles may stop on these roads until they are unloaded but that does not make the roads a place of storage. Clearly, nothing in S.No. 14(d) of the notification applies to the services received by the appellant.
20. Learned counsel for the appellant also contested the demand on the ground of limitation. It is his submission that since the appellant is a Government organisation, it cannot have any malafide and extended period of limitation cannot be invoked at all.
21. We find that Section 73 of the Finance Act, 1994 provides for normal period of limitation of 18 months and extended period 13 ST/52956/2019 of limitation of five years if the non-payment or short payment of service tax is due to:
(a) fraud; or
(b)collusion; or
(c) wilful misstatement; or
(d) suppression of facts; or Violation of provisions of the Act or Rules with an intent to evade payment of service tax.
22. The section does not make any special provision for public sector or government entities. They are governed the same section as anyone else. The submission of the learned counsel is that the appellant can have no malafide intent at all. There is no such legal presumption in the law. Every case has to be examined on the facts of the case. In this case, the appellant had not registered with the service tax. Neither the appellant nor the service provider had declared the services which the appellant had received. Even after the investigation was commenced, the appellant had not made any effort to pay the service tax due from it. The appellant was waiting until the service tax officers got the intelligence, investigated and knocked at the appellant's door. Nothing in the entire conduct of the appellant shows that it behaved like a responsible government entity with no intent to evade service tax. In this factual matrix, we find that extended period of limitation has been correctly invoked. 14
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23. We, therefore, find no reason to interfere with the confirmation of demand invoking extended period of limitation under section 73 with appropriate interest under section 75.
24. The elements necessary to impose penalty under section 78 are the same as the elements required to invoke extended period of limitation. Since we found in favour of the Revenue on the question of extended period of limitation, we find no reason to take a different view on the question of penalty under section 78.
25. Section 77 of the Finance Act provides for penalty for not filing the returns. Admittedly, the appellant had neither paid the service tax nor filed the returns. The penalty under section 77 therefore, deserves to be upheld.
26. In view of the above, we uphold the impugned order and dismiss this appeal.
[Order pronounced on 02/06/2025] (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (P. V. SUBBA RAO) MEMBER ( TECHNICAL ) Tejo