Custom, Excise & Service Tax Tribunal
Bhopal Singh vs Cgst Ghaziabad on 24 September, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70331 of 2024
(Arising out of Order-in-Appeal No.GZB-EXCUS-000-APPL-MRT-20-23-24
dated 27/04/2023 passed by Commissioner (Appeals) CGST, Meerut)
M/s Bhopal Singh, .....Appellant
(A-134, Govindpuram, Ghaziabad-201013)
VERSUS
Commissioner of Central Excise &
CGST, Ghaziabad ....Respondent
(Commissionerate, CGST, Ghaziabad) APPEARANCE:
Shri Rajesh Chhibber, Advocate for the Appellant Shri A.K. Choudhary, Authorised Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70872/2024 DATE OF HEARING : 24 September, 2024 DATE OF DECISION : 24 September, 2024 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.GZB- EXCUS-000-APPL-MRT-20-23-24 dated 27/04/2023 passed by Commissioner (Appeals) CGST, Meerut. By the impugned order Commissioner (Appeals) has upheld the Order-in-Original No.92/ADC/S.Tax/GZB/2021-22 dated 31.12.2021 wherein following has been held:-
"ORDER
(i) I confirm the demand of Service Tax of Rs. 97,60,851/-
(Incl. SB Cess and KK Cess) Rupees Ninety Seven Lakhs Sixty Thousand Eight Hundred Fifty One Only), against M/s Bhopal Singh, 215 Shri Guru Kirpa DI Hatti, Mohan Nagar, Ghaziabad, U.P under Section 73(2) of the Finance Act, Service Tax Appeal No.70331 of 2024 2 1994, by invoking the extended period of time Simitation and order to recover the same from them along with interest payable under the provisions of Section 75 of the Finance Act, 1994;
(ii) I impose a penalty of Rs. 97,60,851/- (Rupees Ninety Seven Lakhs Sixty Thousand Eight Hundred Fifty One Only),) upon M/s Bhopal Singh, 215 Shri Guru Kirpa DI Hatti, Mohan Nagar, Ghaziabad, U.P under the provisions of Section 78(1) of the Finance Act, 1994.
(iii) I impose a penalty of Rs.10,000/- (Rs. Ten Thousands only) upon the said party under the provisions of Section 77(1)(c) of the Finance Act, 1994 for failure to furnish the information/documents called for by the Range Superintendent;
(iv) I also impose penalty of Rs.40,000/- (Rupees Forty Thousand only) @ Rs.10,000/- for each returns upon the said party, under the provisions of Section 77(2) of the Finance Act, 1994 for non-filing the ST-3 return for the period April' 2015 to September 2015, October 2015 to March 2016, April' 2016 to September 2016 and October 2016 to March' 2017."
2.1 Appellant is registered with the Department and is providing taxable services as per Section 35F of the Finance Act, 1994.
2.2 On the basis of third party data received from the Income Tax Department, it was observed that appellant have received an amount of Rs.6,64,78,741/- during the financial year 2015-16 and 2016-17. Though this income was from the services provided by the appellant and they have not discharged the service tax on the same, for the relevant period appellant have not filed any ST-3 returns.
2.3 After making certain inquiries and as appellant is not providing any information despite being called for, it was Service Tax Appeal No.70331 of 2024 3 observed that appellant have not paid service tax as detailed in table bellow:-
Period Differential Value of Total Applicable Total differential Taxable Services so rate of service amount o Service not accounted for In tax (including Tax payable the ST-3 returns cess) (Value in Rupees) 2015- 4,21,91,913 14.50% adv. 61,17,827/-16
2016- 2,42,86,828 15.00% adv 36,43,024/-17
Total 97,60,851/- 2.4 A show cause notice dated 19.04.2021 was issued to the
appellant asking them to show cause as to why-
"(i) Service Tax amounting to Rs.97,60,851/- (Incl. SB Cess and KK Cess) (Rupees Ninety Seven Lakhs Sixty Thousand Eight Hundred Fifty One Only), so deliberatively and willfully short paid by them during the period 2015-16 and 2016-17 should not be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994;
ii) Interest on the above amount of Service Tax, should not be charged and recovered from them under the provisions of Section 75 of the Finance Act, 1994.
(iii) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 read with section 142 and 174(2) of the Central Goods & Services Tax Act 2017, for their act of wilful suppression of taxable value of service and contravention of the provisions of the Finance Act, 1994 with intent to evade payment of Service Tax, as mentioned in the preceding paras.
(iv) Penalty should not be imposed upon them under Section 77(1) (c) of the Finance Act, 1994 for failure to maintain accounts, for failure to furnish Information and for failure to pay tax electronically read with Section 174 of the CGST Act, 2017.
Service Tax Appeal No.70331 of 2024 4
(v) Penalty should not be imposed upon them under Section 77(2) of the Finance Act, 1994 for filing of ST-3 returns. Not filing of ST-3 returns."
2.5 The said show cause notice was adjudicated as per the Order-in-Original referred in para 1 above, after noting that appellant had not responded to show cause notice or to hearing notices.
2.6 Aggrieved appellant have filed appeal before Commissioner (Appeals) which has been dismissed as per the impugned order. 2.7 Aggrieved appellant have filed this appeal. 3.1 We have heard Shri Rajesh Chhibber learned Counsel appearing for the appellants and Shri A.K. Choudhary learned Authorised Representative appearing for the revenue.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For upholding Order-in-Original, impugned order records as follows:-
"4.5 The appellant has filed the subject appeal inter alia on the following grounds:
(i) That, the show cause notice in the case was not served to them and so the adjudication proceedings vide the subject order are null and void
(ii) That, during 2015-16 and 2016-17 they had provided works contract services to various governments departments related to the construction/strengthening widening of public roads which was not liable to service tax in terms of clause 13(a) of N. No. 25/2012-ST dated 20.06.2012, as amended, and accordingly the subject demand does not hold ground.
[In this regard, the appellant has not submitted any reconciliation statement along with relevant contracts and evidence of payment receipts on one-to-one correlation basis and have rather given copies of the following documents on random basis letter dated 03.06.2022 of EE, PWD, Agra in r/o work relating to painting of centre and Service Tax Appeal No.70331 of 2024 5 edge lines by thermoplast coumpond on ACR road, payment certificate issued by EE PWD, Agra for 01.04.2015 to 31.03.2016 in rio work relating to painting of centre and edge lines by thermoplast coumpond on ACR road: Extract of Bond No. 87/EE dated 15.03.2016] relating to in r/o work relating to painting of centre and edge lines by thermoplast coumpond on ACR road on Agra Shamshahad Road: Bill of quantity río work relating to painting of centre and edge lines by thermoplast coumpond on Agra Shamshabad Road (4.650 koms to 17.00 kms]: Letter bearing C No. 6762/42-MAV/2016 dated 28.11 2016 of EE, PWD, Agra relating to work of overhead signage structure and retro reflective board on bicycle highway in Agra District, One page of Bond No. 48/EE/2015-16 dated 20.01.2016 and Bioll of quantities in respect of painting of edge and centre lines by thermoplast compound work on Agra Samshabad road [17 km to 30.250 kms). Supply Order dated 15.11.2016 in r/o work of thermoplast paint on Bicycle Highway Agra/ Ethawa District: One page of supply order dated 10.01.2017 relating to work of thermoplastic paint on Agra Jaiselmer Road. One page supply order dated 21.12.2016 regarding supply and fixing of retro reflective deliantor post at Panipat Khaitma Road (19 to 51 kms], LOA dated 17.10.2016 by EE, PWD, Najibabad for paining centre and edge lines by thrermoplast comound on Najibabad Jagrimpuri Raipur road, Extract copy of bond dated 28.01.2015 for affixing overhead boards on Nahtor- Nurour-Amroha-Joya road; Extract copy of bond dated 21.09.2015 in rio painting of edge and centre lines on Nahtor-Nurour-Amroha-Joya road. Extract copy of bond dated 28.02.2014 in rio retro reflector signage work on Kutcheswar Chaupla to Shyampur Kithore Road; Bill of quantity for laying of hot applied thermoplastic compound including reflectorising glass beads on Modinagar Hapur Road, etc] Service Tax Appeal No.70331 of 2024 6
(iii) That, accordingly the subject demand is not sustainable and consequently penalties are not imposable upon them.
4.6 At the outset I take up the contention of the appellant regarding non receipt of the show cause notice by them. In this regard, on being enquired, the Superintendent, CGST Range 16, Ghaziabad vide his office's letter bearing C. No. 20-CGST/TP/BS/R-16/Div- IV/GZB/107/21/702 dated 11.07.2022 has inter alia informed that the show cause notice No. 46/JC/ST/GZB/2021-22 dated 19.04.2021 was sent to the appellant vide speed post at their registered address but was returned undelivered and was further also sent on their registered e-mail address on 22.04.2021 at 4.08 PM. With respect to service of show cause notice dated 19.04.2021 i.e. at the time of Pandemic COVID-19 1 find it pertinent to cite the Order of the Hon'ble Supreme Court in L.A. No. 48461/2020 [Suo-moto Writ Petition 3 of 2020: Date of Judgment 10.07.2020] wherein it has inter alia been held that: Service of notices, summons and exchange of pleadings/documents, is a requirement of virtually every legal proceeding Service of notices, summons and pleadings etc. have not been possible during the period of lockdown because this involves visits to post offices, courier companies or physical delivery of notices, summons and pleadings. We, therefore, consider it appropriate to direct that such services of all the above may be effected by e-mail, FAX, commonly used instant messaging services, such as WhatsApp, Telegram, Signal etc. However, if a party intends to effect service by means of said instant messaging services, we direct that in addition thereto, the party must valso effect service of the same document/documents by e-mail, simultaneously on the same date. Thus, I find that the contention of the appellant regarding non-service of the show cause notice to them being infructuous on factual and legal terms.
Service Tax Appeal No.70331 of 2024 7 4.7 I find that in the subject case the appellant has claimed exemption under clause 13(a) of N. No. 25/2012- ST dated 20.06.2012 by claiming the activities of painting markings on the road by thermoplastic compound, affixing of overhead signage structure and retro reflective board on road, retro reflector signage work on roads etc. as being the activities of construction of roads.
4.7.1 As regarding the said entries 13(a) and 14(a) of 25/2012-ST dated 20.06.2012, as amended, I find that the said entry no. 13(a) of Notfn. No. 25/2012-ST stipulated exemption to "Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) a road, bridge, tunnel, or terminal for road transportation for use by general public". Further, serial no. 14(a) thereof, provided exemption to "Services by way of construction, erection, commissioning, or installation of original works pertaining to, (a) railways, excluding monorail and metro"; and the Explanation appended thereto specified that "The services by way of construction, erection, commissioning or installation of original works pertaining to monorail or metro, where contracts were entered into before Ist March, 2016, on which appropriate stamp duty, was paid, shall remain exempt". Herein, I find it imperative to state that the Board vide its Circular No. 110/4/2009-S.T., dated 23-2-2009 has clarified that construction of roads means Laying of a new road:
Widening of narrow road to broader road (such as conversion of a two lane road to a four lane road); and Changing road surface (graveled road to metalled road/ metalled road to blacktopped/blacktopped to concrete elc and that maintenance /repair of roads means Resurfacing:
Renovation; Strengthening. Relaying, and Filling of potholes.
4.7.2 In analogy with the facts of this case 1 find that the Hon'ble Tribunal in the case of Royal Electricals Vs. CCE, Service Tax Appeal No.70331 of 2024 8 Pune-1 [2018 (9) G.S.T.L. 205 (Tri. - Mumbai)) has inter alia held as under:
Installation of street lights-Liability to tax-Such service totally independent service and had nothing to do with road construction, street lights may or may not be required besides road, therefore not related to construction of road-Service of installation of street lights being an independent service clearly fell under 'works contract service and taxable during relevant period.
4.7.3 From a conjoint reading of the cited facts, the clarification dated 23.02.2009 issued by the Board as also the pronouncement of the Tribunal in the case of Royal Electricals, supra, it becomes evidentially apparent that the said services of fixing of painting markings on the road by thermoplastic compound, affixing of overhead signage structure and retro reflective board on road, retro reflector signage work on roads etc. are neither covered under the activity of construction of road nor are covered under the activity of repair and maintenance of road. The said activities of fixing of painting markings on the road by thermoplastic compound, affixing of overhead signage structure and retro reflective board on road, retro reflector signage work on roads etc. are for helping the commuters on the roads to direct, guide and regulate them and the said activities in no way constitute construction or repair/maintenance of roads.
4.8 In terms of the facts of the subject case, I further find that the said services of fixing of painting markings on the road by thermoplastic compound, affixing of overhead signage structure and retro reflective board on road, retro reflector signage work on roads etc. to the governmental authorities aptly falls under the ambit of entry 12(a) or 12A(a), of exemption Notfn. No. 25/2012-ST dated 20.06.2012, as amended, as the case may be. As Service Tax Appeal No.70331 of 2024 9 regarding the admissibility of the said exemption to the appellant in terms of the facts of the subject case, my findings are as under:
4.8.1 I find that N. No. 25/2012-ST dated 20.06.2012, entry no. 12(a) thereof, provided exemption to 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. The said entry no. 12(a) of Notification was omitted vide N. No. 6/2015-ST dated 01.03.2015. Further, vide N. No. 9/2016-ST dated 01.03.2016 entry no. 12A was inserted in the said N. No. 25/2012-ST dated 20.06.2012 and the said entry 12A, clause (a) thereof, provided exemption to 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 civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession, under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date. As is apparent, for the period post March, 2015, for claim of exemption under Notfn. No. 25/2012-ST dated 20.06.2012, as amended, entry no. 12A thereof, the contract for the said 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 civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession was to have been entered into prior to 01.03.2015 and thereon the Service Tax Appeal No.70331 of 2024 10 stamp was also to have been paid prior to 01.03.2015 and on this aspect the legislative intent is unambiguously and explicitly clear.
4.8.2 However, I find that the appellant along with their subject appeal has not furnished copies of complete contracts evidencing that the said contracts had been entered prior to 01.03.2015 and that thereon the stamp duty had also been paid prior to 01.03.2015. The aforesaid documents submitted by the appellant regarding the said work of painting markings on the road by thermoplastic compound, affixing of overhead signage structure and retro reflective board on road, retro reflector signage work on roads etc. done during 2015-16 and 2016-17 also do not prove the said requisite fact regarding the related contracts having been entered prior to 01.03.2015 and that thereon the stamp duty having also been paid prior to 01.03.2015."
4.3 In the present case, as per the facts recorded in the impugned order, show cause notice has been issued in the year 2021 which as claimed by the appellant was never delivered to him. Subsequently, the Order-in-Original was passed exparte, in such a situation appellant was not able to place his case before the Original Authority. Thus, it seems that the Order-in-Original was passed in violation of principals of natural justice. 4.4 Commissioner (Appeals) on this very ground should have proceeded to remand the matter back to the Original Authority for allowing to make his submission. However, Commissioner (Appeals) have decided the issue on merits after taking into account the submissions made.
4.5 Appellant submitted before the Commissioner (Appeals) that the services provided by him would services of fixing of painting marking by thermoplastic compound, affixing of overhead signage structure and retro reflective board, and retro reflector signage work on road would be eligible for exemption under Notification No.25/2012 dated 20.06.2012. Commissioner (Appeals) do not agree with the contention that the services Service Tax Appeal No.70331 of 2024 11 would be exempted and he placed reliance upon Board Circular No.110/4/2009-ST dated 23-02-2009 and decision of the Tribunal in the case of M/s Royal Electricals Vs CCE, Pune-I [2018 (9) G.S.T.L. 205 (Tri.-Mumbai)].
Both the Circular and the Decision relied by the Commissioner (Appeals) are for the period prior to 2012 and hence would not be applicable to the facts of the present case. The scheme of the taxation has been changed w.e.f. 01.07.2012 for the relevant period, we find that the Tribunal has been constantly taking the view contrary to the view taken in the impugned order. Tribunal in the case of ST Electrical Pvt. Ltd. Vs CCE, Pune-I [2019 (20) GSTL 273 (Tri.-Mumbai) and also in the case of Royal Electricals - Order No. A/90284/2017-STB, dated 18-10-2017 have observed as follows:-
"The revenue has cited the order of this Bench in case of Royal Electricals supra wherein the demands were confirmed. We find that the ratio of Royal Electricals are not applicable to the facts of the present case as in said case no evidence were adduced before Tribunal that such Street lights were installed in respect of Road Construction. Further the services involved were of erection, commissioning and installation whereas in the present case the services involved are of Works Contract as held by the adjudication authority. The Appellants are rendering services of Works contract which also included transfer of property and the said services were in respect of Road. Even their clients are deducting the VAT at source on material so supplied/used which shows that the services involved are of Works contract. In terms of Section 65(105)(zzzza) of the Finance Act, 1994 the services in respect of roads has been excluded from the said category. The Tribunal in case of Pioneer Fabricators Pvt. Ltd. v. Commissioner - 2016 (42) S.T.R. 563 (Tri.) has held that works of fixing of metal barriers on concrete foundation alongside highways essentially in nature of civil work and metal crash not classifiable as equipment under „erection, commissioning and installation services‟. Applying the ratio Service Tax Appeal No.70331 of 2024 12 of said Tribunal order and in view of our findings we are of the view that the services of Works Contract rendered by the Appellant is in respect of Roads and thus not chargeable to service tax for the period after 1-6-2007."
4.6 We further observe that all these activities have been considered to be the activities in relation to construction/repair and maintenance of the roads and hence, hence exempt from payment of service tax. These issues have been already decided by the Tribunal in following cases:-
2017(3)GSTL455(Tri. Del): Jagdish Prasad Aggarwal Toll Plaza and service lanes;
2021(44)GSTL95(Tri. Bang): GMR Projects- Multilevel parking;
20112(44)GSTL110(Tri. Bang) GMR Projects: Toll plaza, cattle/pedestrian crossing facilities, parking bay. Upheld by apex court as reported (2022(1)CENTAX8(SC). 2016(32)STR564(Tri. All.): Pioneer Fabricators: Metal Crash Barriers alongside highway;
2019(20)GSTL273(Tri. Mum.): ST Electricals: Road lighting. Upheld by apex court in 2024(388)ELT388(SC); 2022(58)GSTL345(Tri. All.): Consulting Engineers. 4.7 In view of the above, we do not find any merits in the impugned order on merits also and the same is set aside. 5.1 Appeal is allowed.
(Operative part of the order pronounced in open court) (P.K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp