Custom, Excise & Service Tax Tribunal
U P Singh vs Cgst & Ce Agra on 18 August, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Service Tax Appeal No.70501 of 2022
(Arising out of Order-in-Appeal No.489-ST/APPL/LKO/2022 dated 05/08/2022
passed by Commissioner (Appeals) Customs, Central Excise & Service Tax,
Lucknow)
M/s U.P. Singh, .....Appellant
(Near Rashtriya Vdhyalay, 1019,
Bye Pass, Adarsh Nagar Shikohabad, Firozabad)
VERSUS
Commissioner of Central Excise &
CGST, Agra ....Respondent
(113/4, Sanjay Place, Agra)
APPEARANCE:
Ms Surabhi Sinha, Advocate for the Appellant
Dr. R. Sakthivel &
Shri Santosh Kumar, Authorised Representative for the Respondent
CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70578/2025
DATE OF HEARING : 01 May, 2025
DATE OF PRONOUNCEMENT : 18 August, 2025
SANJIV SRIVASTAVA:
This appeal is directed against Order-In-Appeal No. 489-
ST/APPL/LKO/2022 dated 05.08.2022 of the Commissioner
(Appeal) Customs, GST & Central Excise Lucknow. By the
impugned order, Order-in-Original No. 86/Demand/ST/AC/CGST/
Div-FZD/2020-21 dated 23.03.2021, holding as follows, has
been upheld'
ORDER
(i) I confirm the demand of Service Tax amounting to Rs.2,73,827/- (inclusive all cess) (Rs. two lacs seventy three Service Tax Appeal No.70501 of 2022 2 thousand eight hundred twenty seven only) under proviso to Section 73 of the Finance Act. 1994 read wit Section 174 of the CGST, Act, 2017.I drop the demand of Rs.3,81,762/- (Rs.6,55,589/- - Rs.2,73,827/-) being over & above the actual demand, is liable to be withdrawn, being not sustainable and I appropriate he amount of Rs.2,13,705/- as deposited by the party vide challans as referred above against the confirmed demand as discussed in Para 5 (ix) above
(ii) I order to recover the interest at applicable rate from the party on the above demand under Section 75 of the Finance Act, 1994 read with Section 174 of the Central Goods & Services Tax Act, 2017.
(iii) I impose penalty of Rs.60,122/- (Rs, Sixty thousand one hundred twenty two only) equal to the service tax amount liable upon the party under Section 78 of the Finance Act, 1994 read with Section 174 of the Central! Goods 8 Services Tax Act 2017 as discussed above for suppression of facts and contravention of the provisions of the Finance Act (ibid) and rules made thereunder as discussed in Para 6 above.
(iv) I refrain the penalty as proposed to be imposed upon the party under Section 77 (1) (c) (i) & (ii) of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 non- submission of information and documents respectively, being not sustainable as discussed in Para 7 above
(v) I impose the penalty of Rs.10,000/- upon the party upon the party under Section 77(1) (a) of the Finance Act, 1994 in contravention of the provisions of Rule 4 of the Service Tax Rules, 1994 read with Section 69 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 in reference to non obtaining the Service Tax Registration on time as discussed in Para 8 above
(vi) I impose the penalty in the form of late fee of Rs.62,800/- for contravention of provisions of Rule 7 of the Service Tax Rules, 1994 read with Rule 7C of the Service Tax Rules, 1994 Section 70 of the Act (ibid) under Section 77 (2) of Service Tax Appeal No.70501 of 2022 3 the Act (ibid) read with Section 174 of the CGST Act, 2017, in relation to late filing of ST-3 returns as discussed in Para 9 above 2.1 The appellant was registered with the department vide Service Tax Registration No. BHFPS7178JSD002 for providing the taxable services.
2.2 As per the information gathered from the third party sources that to effect that appellant received huge consideration on account of providing declared service but did not deposit Service Tax thereon inquiries/ investigations were initiated.
2.3 On being inquired, the appellant submitted copy of ST-3 returns and 26AS. On examination of that documents, department noticed that the appellant shown less value in their ST-3 returns in comparison to their Form 26AS it was observed that appellant had short paud service tax as detailed in table below:
Details of the receipts as shown under Section 194C in 26AS of the party and the calculation of service tax liability thereon for the period (10/12 to 03/13) to 2016-17 S.N Name of the TDS Financial Year o deductor/Service recipient 2012-13 2013- 14 2014-15 2015-16 2016-17 Total 1 Executive Engineer, UPPCL, EDD 1848286 717097 1123441 763419 2023276 6475519 2 Total (receipts shown in 26AS) 1848286 717097 1423441 763419 2023276 6475519 1 Receipts shown 0 0 35010 408381 994793 1438184 in ST-3 Returns 2 Highest taxable 1848286 717097 1123441 763419 2023276 6475519 value 3 Rate of Service 12.36 12.36 12.36 12.36, 14 15 Tax & 14.5 4 Service tax 228448 88633 138857 107147 303491 866576 payable on entire Highest value 5 Service tax paid 0 0 4327 57442 149218 210987 6 Difference (4-5) 228448 88633 134530 49705 154273 655589 S. Tax to be paid 2.4 Since, the appellant did not provide the copy of all Financial records/ documents as requested to them by the jurisdictional Range Officer during the course of investigation, Service Tax Appeal No.70501 of 2022 4 therefore, no option had left with the jurisdictional Range Officer except to propose the demand on the basis of the 26AS as referred above.
2.5 A show cause notice dated 10.08.2018 was issued to the appellant asking him to show cause as to why:
(i) An amount of Rs.64,75,519/- (Rupees sixty four lakhs seventy five thousands five hundred nineteen only) should not be treated as the value of taxable services provided by them during the Financial Years 2012-13 to 2016-17 and accordingly Service Tax amounting to Rs.8,66,577/-
(Rupees eight lakhs sixty six thousand five hundred seventy seven only) as detailed in Table-1. However as per Service Tax returns the party has paid Service Tax Rs. 2,10,987/-. Thus the party is liable to pay to difference of Service Tax amount of Rs. 6,55,589/- (Rupees Six lakhs fifty five thousand five hundred eighty nine only) not paid /short paid including Education Cess, Secondary & Higher Education Cess, Swacch Bharat Cess and Krishi Kalyan Cess should not be demanded and recovered from them under the proviso to Section 73(1) of the Finance Act 1994 as amended read with Section 174 of the CGST Act 2017;
(ii) Interest at the appropriate rate should not be recovered from the Noticee under Section 75 of the Act read with Section 174 of CGST Act, 2017;
(iii) Penalty should not be imposed upon them under Section 78 of the Act read with Section 174 of CGST Act, 2017 for suppressing the facts from the department with intent to evade payment of service tax;
(iv) Penalty should not be imposed upon them under Section 77(1)(a) of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 for failed to get themselves registered timely;
(v) Late fee of Rs.62,800/- (Rupees Sixty two thousand eight hundred only) should not be imposed and recovered from them under Section 77(2) of the Act for contravention of Service Tax Appeal No.70501 of 2022 5 section 70 of the Act read with Section 174 of CGST Act, 2017 as the Notice failed to file ST-3 returns for the period 2012-13 (Oct'12 to Mar'13) & 2013-14 (April'23 to Sept'13 & Oct'13 to Mar'14);
(vi) Penalty should not be imposed upon them under section 77 (1) (c)(i) and section 77 (1) (c) (i) of the Finance, Act read with Section 174 of the CGST Act, 2017 for failure to furnish information and produce documents.
2.6 The show cause notice was adjudicated vide OIO No. 110/Demand/ST/FZD/2019 dated 29.03.19 confirming the demands so proposed along with interest and penalties. Aggrieved appellant filed appeal before the Commissioner (Appeal). The appeal was allowed and the matter was remanded for de-novo consideration to the adjudicating authority as per Order in Appeal No 408-ST/Appl/Lko/2019 dated 23.07.2019.
2.7 In the remand proceedings the matter was again adjudicated as per order in original referred in para 1 above.
2.8 Aggrieved appellant filed the appeal before Commissioner (Appeal). The appeal filed has been dismissed as per the impugned order.
2.9 Hence this appeal.
3.1 I have heard electronically, Ms Surabhi Sinha Advocate for the appellant and Shri R Sakthivel and Shri Santosh Kumar, Authorized Representative for the revenue.
3.2 Arguing for the appellant learned counsel submits Vide Clause 101 of the Finance Act, 2016, a specific provision laying down with retrospective effect for granting exemption and to allow refund on Government construction during the period 01.07.012 to 29.01.2024. Government of U P enacted U P Electricity Reform Act, 199 and set up the U P Electricity Regulatory Commission as an autonomous body corporate in August 2003. DVVNL is one of the statutory bodies created under the abovementioned act.
Service Tax Appeal No.70501 of 2022 6 Service Tax was not payable on works contract services in terms of Notification No.25/2012-ST dated 20.06.2012 provided to M/s Dakshinanchal Vidyut Vitran Nigam Limited as the same was a Government organization. Reliance is placed on the decision of Chandigarh bench in case of Arvinda Electricals [Final Order No 62732/2018 dated 31.08.2018 in Appeal No E/60611/2017-DB] The transactions undertaken were duly reflected in the book of account and the issue involves interpretation of complex legal provisions. Therefore, the invocation of extended period of limitation is not warranted in the present case as has been held in following cases:
o Gujarat Intelligence Security [2010 (19) STR 270 (T- Ahmd)];
o Ispat Industries Ltd [2006 (199) ELT 509 (T-Mum)]; o NIRC Ltd. [2007 (209) ELT 22 (T-Del)];
o Chemical & Fibres Of India Ltd [1988 (33) ELT 551 (T)] As there was no intention to evade payment of taxes penalty under Section 77 & 78 could not have been imposed. Section 80 provides that no penalty could be imposed if there is reasonable cause for failure and provides for waiver of penalty. Reliance is placed on the following decisions:
o ETA Engineering Ltd. [2004 (174) ELT 19 (T-LB)] o Flyingman Air Courier Pvt. Ltd. [2004 (170) ELT 417 (T-Del)];
o Star Neon Singh [2002 (141) ELT 770 (t-Del)] o Medpro Pharma Pvt Ltd. [2006 (4) STR 322 (T-Del)] 3.3 Authorized representative reiterated the findings recorded in the impugned order.
4.1 I have considered the impugned order along with the submissions made in appeal and during the course of argument.
―5. DISCUSSION & FINDINGS:
Service Tax Appeal No.70501 of 2022 7 I have gone through the case records and grounds of appeal of the appellant. I find that in this appeal the core issue to be decided is whether the Works Contract Service provided by the appellant to M/s Dakshinanchal Vidyut Vitran Nigam Limited was exempt in terms of Notification No.25/2012-ST dated 20.06.2012 or not?.
I find that the appellant in their first grounds of appeal pleaded that M/s Dakshinanchal Vidyut Vitran Nigam Limited was a Government Organization and the Service of Works Contract provided to them was exempt in terms of Notification No.25/2012-ST dated 20.06.2012. Ongoing through the impugned order, I find that the original Adjudicating authority in Para 5(i) of their order discussed the same issue at length and the relevant portion of the same is reproduced as under-
"the party has submitted a certificate of reference No. 460 dated 29.04.2018 of the Executive Engineer, Electrical Distribution Division, Shikohabad wherein they have stated that they have not paid any Service to M/ s U.P.Singh, Shikohabad during the Financial Year 2012-13 and have further stated that they have started to pay the Service Tax liability w.e.f. Oct'13 onwards. From which it confirms that they had started to discharge their Service Tax liability being their identity as business entity registered as body corporate".
In view of the aforesaid I find that M/s Dakshinanchal Vidyut Vitran Nigam Limited started paying Service Tax for October, 2013, which inferences that M/s Dakshinanchal Vidyut Vitran Nigam Limited was not a Government organization. It is also pertinent to mention here that the appellant has not submitted any evidence vide which it can be established that M/s Dakshinanchal Vidyut Vitran Nigam Limited was a government organization.
Service Tax Appeal No.70501 of 2022 8 Now, I take up the second ground of appeal of the appellant that during the period 2012-13 and 2013-14 the appellant had provided services of Works Contract & Manpower supply and for which they were eligible to avail benefit under Notification No.30/2012-ST dated 20.06.2012. In this context, I find that the original adjudicating authority in Para 5(vii) & (vi) of their O-I-O discussed the same in detail and also extended the benefit of Notification No.30/2012- ST dated 20.06.2012 to the appellant. Therefore, I don't find any merit in this ground either of appeal of the appellant.
Now, I take up third ground of appeal of the appellant wherein they pleaded that Demand of Service Tax has been incorrectly calculated as the appellant had not charged any Service Tax from the M/s Dakshinanchal Vidyut Vitran Nigam Limited, hence Service Tax was to be calculated as per cum tax value. I find that the same issue also has been discussed by the original adjudicating authority in Para 5(vi) of their O-I-O and I too concur with the same findings of adjudicating authority. I further find that the adjudicating authority has in Para 6 of their O-I-O discussed at length regarding invocation of extended period which I find just and proper. In summation, I don't find any merit in any of the grounds of appeal of the appellant, consequently, reject the same.‖ 4.3 Appellant has claimed the exemption under Notification 25/2012-ST claiming that the services provided by them were provided by them to statutory authority. However I do not find any merits in the submission made by the appellant as the appellant had provided the services to DVVNL. However the facts suggest that DVVNL (Dakshinanchal Vidyut Vitran Nigam Ltd.) is not a statutory body. It is a public sector company incorporated under the Companies Act, classified as a state government company. While it operates under the license granted by the Electricity Act, 2003, and is subject to regulations by the Uttar Service Tax Appeal No.70501 of 2022 9 Pradesh Electricity Regulatory Commission (UPERC), it is not created by an Act of Parliament or legislature, which is the defining characteristic of a statutory body. The facts with regards to status of DVVNL are recorded in the order of Agra Mandal Vyapar Sangathan [Order dated 15.06.2012 in Public Interest Litigation (PIL) No. - 30385 of 2012] ―2. It is submitted that prior to 1999, the authority to generation, transmission and distribution of electrical energy vested in U.P. State Electricity Board,(here-in-after referred to as 'UPSEB'). It was a statutory body constituted under Section 5 of Electricity (Supply) Act, 1948, (here-in- after referred to as 'Act of 1948'). The UPSEB was under a statutory obligation to function with an objective of larger public welfare and interest instead of sheer profit motive. With the objective of improvement in the aforesaid functioning, the legislature enacted U.P. Electricity Reforms Act, 1999, (here-in-after referred to as 'Act, 1999'), whereby different companies were incorporated under the Companies Act, contemplated to undertake the function of generation, transmission and distribution of electrical energy. Initially three companies were incorporated, namely U.P. Power Corporation Limited (here-in-after referred to as 'UPPCL'), U.P. Jal Vidyut Vitran Nigam Limited (here-in-after referred to as 'UPJVVNL') and U.P. Thermal Power Generation Limited (here-in-after referred to as 'UPTPGL'). The later two companies were assigned the function of generation of electricity from hydle resources and thermal. The function of generation of UPSEB along with its assets, obligations etc. was transferred to these two companies. The third company, namely, UPPCL was assigned the function of transmission and distribution of electrical energy in the State with a further objective that the function of distribution shall further be transferred to other companies, which would be constituted only for distribution and supply. The UPSEB for all practical purposes thus ceased to function. Its duties, Service Tax Appeal No.70501 of 2022 10 power, assets etc. stood transferred to the aforesaid three companies, as stated above. This happened pursuant to the U.P. Electricity Reforms Transfer Scheme, 2000 issued under Section 23 of Act, 1999 with effect from 14.01.2000.
3. There was another statutory body constituted, namely, U.P. Electricity Regulatory Commission (here-in-after referred to as 'UPERC'), which was formed in effect to control and monitor functioning of electrical undertakings termed as "Licensee".
4. The UPPCL was granted license on 04.10.2000.
5. A comprehensive enactment in relation to electricity sector with an objective of major reformation, simplification and development came to be enacted vide Electricity Act, 2003 (Act 2003), which came into force on 10.06.2003. The earlier Central enactment, namely, Electricity Act, 1910 and Electricity Supply Act, 1948 came to be repealed but the Act, 1999 was protected vide Section 185 (3) in so far as it was not inconsistent with Act, 2003.
6. After Act 2003, the function of distribution and supply of electrical energy sought to be transferred by UPPCL to four new companies, namely, (i) Dakshinanchal Vidyut Vitran Nigam Limited (here-in-after referred to as 'DVVNL'); (ii) Madhyanchal Vidyut Vitran Nigam Limited (here-in-after referred to as 'MVVNL'); (iii) Purvanchal Vidyut Vitran Nigam Limited (here-in-referred to as 'PVVNL') and (iv) Paschimanchal Vidyut Vitran Nigam Limited incorporated in 2003. These companies were incorporated with an objective of performing the function of distribution of electrical energy in the area specified in the transfer scheme notified under Section 23 with effect from 12.08.2003. The obligation etc. of UPPCL in respect to distribution and supply of electrical energy stood transferred to these four companies. In respect to district Agra, including Agra city the DVVNL succeeded UPPCL. It is Service Tax Appeal No.70501 of 2022 11 said that no separate license was obtained by DVVNL till 20.01.2010 and it continued to function under the license of UPPCL since UPPCL was a holding company and DVVNL was a subsidiary company of UPPCL.‖ 4.4 Both the authorities have referred to the Certificate of Reference No 460 dated 29.04.2018, issued by the Executive Engineer, Electrical Distribution, Sikohabad, wherein it has been clearly stated that they were paying the due service tax to the appellant from October 2013. The executive engineer has issued the said certificate with regards to payment of service atx to appellant, as he was aware of the fact that DVVNL is body corporate and not a statutory body created under any statute. Further I find that Hon'ble Allahabad High Court has in case of Ashok Kumar [Order dated 18.07.2008 in Writ Petition No 21073 of 2008 Neutral Citation No. - 2008:AHC:2819-DB] clearly held as follows:
―33. The term "Government company" is defined under Section 2(31) of the Act, 2003 and reads as under:
"2(31) "Government company" shall have the meaning assigned to it in section 617 of the Companies Act, 1956 (1 of 1956)."
34. Section 617 of 1956 Act defines a "Government company" as under:
"617. Definition of "Government Company".-- For the purposes of this Act Government company means any company in which not less than fifty one per cent of the paid-up share capital is held by the Central Government, or by any State Government, or Governments, or partly by the Central Government, and partly by one or more State Governments, and includes a company which is a subsidiary of a Government Company as thus defined." (emphasis added) Service Tax Appeal No.70501 of 2022 12
35. The definition of 'Government company' thus extends to a company which is subsidiary of a 'Government company'. The term "subsidiary company" has been defined under Section 2(47) read with Section 4 of 1956 Act which are reproduced as under:
"2(47) "subsidiary company" or "subsidiary" means a subsidiary company within the meaning of section 4;"
"4. Meaning of "holding company" and "subsidiary".--
(1) For the purpose of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if,--
(a) that other controls the composition of its Board of Directors; or
(b) that other -
(i) where the first-mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights in all respects as the holders of equity shares, exercises or controls more than half of the total voting power of such company;
(ii) where the first-mentioned company is any other company, holds more than half in nominal value of its equity share capital; or
(c) the first-mentioned company is a subsidiary of any company which is that other's subsidiary."
Service Tax Appeal No.70501 of 2022 13
36. A conjoint reading of Section 4(1) read with Section 617 of 1956 Act leads to inescapable conclusion that DVVNL is a subsidiary company of UPPCL which admittedly is a Government company and, therefore, DVVNL is also a 'Government company' as defined under Section 617 of 1956 Act. Once we reach to this conclusion that DVVNL is a 'Government company' as defined under Section 617 of 1956 Act, the answer to question whether it is 'deemed licensee' under Section 14 of the Act, 2003 becomes clear. The proviso does not talk of a 'Government company' which has already been licensed under any provision or under any statute but the mere fact that it is a 'Government company' is sufficient to qualify it to be a 'deemed licensee' under proviso to Section 14 of the Act, 2003. Rest of the things are not relevant at all. A deeming provision made in a statute is intended to cover a situation which otherwise does not exist and, therefore, unless there is some restriction provided in the statute itself, expressly or by necessary implication, deeming provision has to be given full effect.‖ 4.5 In view of the discussions as above I conclude that DVVNL is not a statutory body and in respect of services provided to DVVNL the exemption under notification 25/2012-ST and subsequent amending notifications shall not be admissible as claimed by the appellant.
4.6 I also do not find any merits in the submissions made by the appellant against invocation of extended period of limitation. There are no complex issues involved in the matter. The matter with regards to the status of DVVNL as a Government Company and not a statutory authority was settled by the Hon'ble jurisdictional High Court in 2008. Further undisputedly the amount of the service tax was being paid with effect from Service Tax Appeal No.70501 of 2022 14 October 2013 by the Executive Engineer to the appellant as has been stated in the certificate dated 29.04.2018. The intention to short pay or evade the payment of service tax thus is clearly established. Hence I do not find any merits in the submissions made by the appellant in this regard or against the imposition of penalty under Section 78. The decisions referred in the submissions made by the appellant counsel at the time of arguments were rendered in the facts of those case and will not help the case of appellant for the reasons stated above.
4.8 In the submissions made no challenge has been made to penalty imposed under Section 77 (1) (a) and Late fee under Section 77(2) of the Finance Act, 1994. Hence I am not discussing these.
4.9 I do not find any merits in this appeal.
4.10 Appeal is dismissed.
(Order pronounced in open court on-18 August, 2025) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp