Custom, Excise & Service Tax Tribunal
Dharmendra Gautam vs Cgst & Ce Agra on 2 July, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70499 of 2022
(Arising out of Order-in-Appeal No.583-ST/APPL/LKO/2022 dated 02.09.2022
passed by Commissioner (Appeals) Customs, CGST & Central Excise,
Lucknow)
Shri Dharmendra Gautam, .....Appellant
(35/60-A, Laskarpur, Mughal Road,
Kamla Nagar, Agra-282005)
VERSUS
Commissioner of Central Excise &
CGST, Agra ....Respondent
(113/4, Sanjay Place, Agra-282002) APPEARANCE:
Shri Aalok Arora, Advocate for the Appellant Shri Santosh Kumar, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO.- 70444/2025 DATE OF HEARING : 06.03.2025 DATE OF PRONOUNCEMENT : 02.07.2025 The present appeal has been filed by the Appellant assailing the Order-in-Appeal No.583-ST/APPL/LKO/2022 dated
02.09.2022 passed by the Ld. Commissioner (Appeals) Central GST, Lucknow, by which the appeal filed by the Appellant has been partly allowed by confirming the demand of Service Tax of Rs.15,83,843/- alongwith interest and imposition of equal penalty under Section 78 of the Finance Act, 1994.
2. Facts of the case in brief are that during the F/Y 2016-17 the Appellant M/s Dharmendra Gautam had provided construction service in respect of Public Road & Government Building but now Service Tax Appeal No.70499 of 2022 2 dispute pertains to construction work of godown & office for storing of electronic voting machine, construction & repair of Tourist Avas Grih, construction of fire fighting& fire alarm system in District Court, Agra and repair of Court Room building and Commissioner Agra premises and construction & repair of strong room in Naveen Galla Mandi.
3. On the basis of information for the F/Y 2016-17 received from IT department under third party data, Show Cause Notice1 dated 28.04.2021 has been issued invoking extended period stating therein that the amounts shown in the financial documents (26AS) appear to be receipt of Rs.7,25,54,587/- in lieu of providing taxable services covered under the provisions of Finance Act, 1994. It is also mentioned in the SCN that services provided by the noticee during the F/Y 2016-17 were neither covered in the Negative List of services under Section 66D of Finance Act, 1994 nor exempted under Mega Exemption Notification No.25/2012-ST dated 20.6.2012 as amended from time to time. Therefore, the Appellant should have taken registration under Section 69 of Finance Act, 1994 and service tax of Rs.1,06,92,894/- should have been paid by them as per provisions of Section 68 of the Finance Act, 1994 and accordingly, they should have filed the ST-3 returns as laid down under the provisions of Section 70 of the Act ibid.
4. The Appellant filed detailed reply to SCN and vide adjudication Order dated 31.3.2022, however the Adjudicating Authority confirmed the demand of service tax Rs.55,18,514/- 1 SCN Service Tax Appeal No.70499 of 2022 3 alongwith interest and imposed equal penalty under Section 78, penalty of Rs.10,000/- each under Section 77(1)(a), 77(1)(c), 77(2) of Finance Act 1994, Rs.80,000/- late fee under Section 70 read with Rule 7C of the Rules and dropped the demand of service tax Rs.30,39,950/-.
5. On appeal, by the impugned Order-in-Appeal dated 02.09.2022, the appeal of the Appellant has been partly allowed, confirmed demand of Service Tax to the tune of Rs.15,83,843/- pertaining to construction of godown & office for storing of electronic voting machine, construction & repair of Tourist Avas Grih, construction of fire fighting& fire alarm system in District Court, Agra and repair of Court Room building and Commissioner Agra premises for which work entrusted by PWD Department and construction & repair of strong room in Naveen Galla Mandi, interest and equal penalty under Section 78 of the Act and deleted the penalty imposed under Section 77 of the Act.
6. Aggrieved with the impugned order, to the extent of demand of service tax confirmed and penalty under Section 78 imposed, the Appellant has filed the present appeal.
7. Ld. Counsel for the Appellant has submitted that during the F/Y 2016-17, the Appellant did construction work with material (work contract) in respect of road & Government building etc. The Appellant has done original construction service with material of godown & office for storing of electronic voting machine, construction & repair of Tourist Avas Grih, construction of fire fighting & fire alarm system in District Court, Agra and repair of Court Room building and Commissioner Agra premises Service Tax Appeal No.70499 of 2022 4 for which work entrusted by PWD Department. The Appellant's counsel invited attention to the work contract awarded by Public Works Department which shows different works of addition, alteration, fixing of new items, as well as new construction was carried-out at the above mentioned places, thus according to Appellant the construction work falls under definition of 'original work' under Rule 2(A) of Service Tax (Determination of Value) Rules, 2006 which means all new constructions, all type of additions & alterations to abandoned or damaged structure on land that are required to make them workable. Similar plea was raised for construction & repair of strong room in Naveen Galla Mandi was done as per work order of Executive Engineer, CD-1 (TTZ), PWD Agra where different work done (brick work with coarse sand mortar & cement and other work as mentioned in Work Order) fall under definition for 'original work', therefore plea was raised that construction work at both the places does not fall under definition of 'repair' as held by Commissioner (Appeals). According to the Appellant, it would fall under 'original work' and taxable value of work has to be taken as 40%. Further, it was submitted that perusal of work order shows no service tax was mentioned in it, therefore value has to be treated as cum-tax value. It was submitted, the Commissioner (Appeals) denied the exemption as work order were of 2016-17 and according to entry No.12A of Notification No.9/2016-ST dated 01.03.2016 the work contract has to be prior to 01.03.2015. Lastly, it was argued the SCN was issued on the basis of information for the F/Y 2016-17 received from Income Service Tax Appeal No.70499 of 2022 5 Tax Department under third party data exchange, noticee has received amounts for providing taxable services as per ITR data for the F/Y 2016-17 and nature of service has not been mentioned, therefore SCN is bad in law and liable to be set- aside. The Appellant further submitted that they were under bonafide belief since the construction work with material were done for Government is not taxable, therefore extended period is not invokable and demand beyond normal period of limitation is barred by limitation. He relied upon the decision of the Tribunal in the case of Mega Trends Advertising Ltd. Vs. CCE & ST, Lucknow reported in 2020 (38) G.S.T.L. 57 (Tri. - All.).
8. Ld. Authorized Representative for the revenue reiterated the findings recorded in the impugned order and prayed for dismissal of the appeal.
9. Heard both the sides and perused the appeal records.
10. I find from the records that SCN dated 28.04.2021 has been issued on information for the F/Y 2016-17 received from Income Tax Department/26AS under third party data exchange. Since, the Appellant has not taken ST Registration and returns not filed, the SCN has been issued on the basis of figures in ITR/26AS. I have gone through the work order given by PWD Department regarding construction service with material of godown & office for storing of electronic voting machine, construction & repair of Tourist Avas Grih, construction of fire fighting& fire alarm system in District Court, Agra and repair of Court Room building and Commissioner Agra premises shows there are different work assigned and mainly are Service Tax Appeal No.70499 of 2022 6 addition/alternation and new construction were carried-out, thus there is force in Appellant's argument that construction work at above mentioned places falls under definition of 'original work' under Rule 2(A) of Service Tax (Determination of Value) Rules, 2006 which means all new constructions, all type of additions & alterations to abandoned or damaged structure on land that are required to make them workable, hence the Adjudicating Authority is directed to re-quantify the demand of service tax on above work orders on 40% of value under 'original work' under Rule 2A of Service Tax (Determination of Value) Rules, 2006 and also by giving benefit of cum-tax value.
11. The next issue is construction & repair of strong room in Naveen Galla Mandi where work order given by Executive Engineer, CD-1 (TTZ), PWD Agra. I have gone through the work order of construction & repair of strong room in Naveen Galla Mandi where brick work with coarse sand mortar & cement and other work was there which falls under definition for 'original work' under Rule 2(A) of Service Tax (Determination of Value) Rules, 2006 which means all new constructions, all type of additions & alterations to abandoned or damaged structure on land that are required to make them workable. The Adjudicating Authority is directed tore-quantify the demand of service tax by taking construction & addition/alteration of strong room at Naveen Galla Mandi under 'original work' under Rule 2A of Service Tax (Determination of Value) Rules, 2006 and demand of tax has to be worked-out on 40% of value and also by giving benefit of cum-tax value.
Service Tax Appeal No.70499 of 2022 7
12. In the matter at hand, construction work was done for Government and no service tax was mentioned in work orders, therefore, I do not find any ingredient of suppression of facts, wilful mis-statement etc; with an intent to evade payment of Service Tax. The penalty imposed under Section 78 is therefore set-aside.
13. In view of the above discussion, the appeal filed by the Appellant is partly allowed in the above terms.
(Order pronounced in open court on - 02.07.2025) (P. K. CHOUDHARY) MEMBER (JUDICIAL) LKS