Custom, Excise & Service Tax Tribunal
Aaryaa Construction vs Commissioner Of Gst&Cce(Madurai) on 9 July, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Service Tax Appeal No. 40999 of 2019
(Arising out of Order-in-Appeal No. No.035/2019 dated 31.01.2019 passed by the
Commissioner of GST & Central Excise (Appeals), Coimbatore at Madurai)
M/s Aaryaa Construction ...Appellant
No.73A Sangupuram, 5 Street,
th
Sankarankovil - 627 756.
Versus
Commissioner of GST and Central Excise ...Respondent
C.R. Building, Rathinasamy Nadar Road, Bibikulam, Madurai - 625 002.
APPEARANCE:
For the Appellant : Shri. M.N. Bharathi, Advocate For the Respondent : Ms. Anandalakshmi Ganeshram, Authorised Representative CORAM:
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) HON'BLE MR. AJAYAN T.V, MEMBER (JUDICIAL) FINAL ORDER No.40717/2025 DATE OF HEARING: 25.03.2025 DATE OF DECISION: 09.07.2025 Per AJAYAN T.V.
M/s Aaryaa Construction, the appellant herein has called into question, the Order-in-Appeal No.035/2019 dated 31.01.2019 whereby, the appellate authority has rejected the claim of the appellant as provider of manpower supply service and has classified the service provided by the appellant as works contract service and had remanded the matter back to the original adjudicating authority for the limited purpose of reworking the liabilities and the consequential modification in the penalty imposable. 2
2. Succinctly, facts are that the appellant was engaged by M/s. Kalpataru, Power Transmission Limited, (Kalpataru) for providing civil construction works that is laying of pile foundation for erection of electrical transmission towers. The appellant is registered with the department for providing manpower recruitment / supply agency service and works contract service. As per the agreement entered into by Kalpataru and the appellant, materials, namely steel, concrete, cement, jelly, sand, etc., are provided by the service receiver Kalpataru while the appellant collected only service charges for labour works such as excavation, concreting, placing RCC and counter poise, earthing, backfilling with bored soil, removal of excess soil, road making as required at site, cleaning of site for constructing electrical tower, preparatory work for constructing road for carrying goods to the construction place, etc. However, procuring required quantum of blue metal and sand for the construction is within the scope of the appellant. During audit of the accounts of the appellant, it was noticed that for the period from October-12 to March-13, the appellant has classified the services as manpower supply service and paid service tax at 3.09% on the service charges and from April-13 to November-14, classified the said services as works contract service and paid service tax at 6.18% on the service charges by availing the benefit of partial charge mechanism under Notification No.30/2012 ST dated 26-06-2012 and left the balance service tax to be paid by the service receiver under reverse charge mechanism. 3
3. The department was of the view that the services provided by the appellant were neither manpower supply services nor works contract services, since M/s. Kalpataru were providing all the materials and there was no transfer of property and goods involved and no sales tax by works contract was paid in respect of the transactions. Further, the department was of the view that the service charges were collected for labour works during the entire period from October-2012 to November-2014, which are purely labour service, and it is neither manpower supply service nor works contract service. The department was further of the view that the appellant has wrongly declared the above work as manpower supply service during the year 2012-13 and works contract service during the year 2013-14 and 2014-15, and that by wrongly availing the benefit of partial charge under Notification No.30/ 2012- ST dated 26-06-2012, the appellant has not paid service tax to the tune of Rs. 1,11,98,439/- on the taxable income received from the service receiver during the period from 2012-13 to 2014-15 (up to 11/ 2014). The Department therefore issued a show cause notice Sl.No. 4/2016-Commr./TVL dated 26-08-2016 proposing demand of the aforesaid service tax amount along with appropriate interest and proposing the imposition of penalties under section 76, 77, 78.
4. After following due process of law, the Adjudicating authority confirmed the demand as proposed in the show cause notice along with appropriate interest and equivalent penalty under Section 78 of the Finance Act 1994. Aggrieved by the same the appellant 4 preferred an appeal before the Commissioner (Appeals), Madurai. The appellate authority, vide the impugned order in appeal, rejected the claim of the appellant as service provider of manpower service and further held that the service undertaken by the appellant during the impugned period under work order KPTL/ORAI/FDN/13-14/ WO No/02 dated 15.05.2013 are to be categorized under Works Contract service. The service provided by the appellant under the work orders, viz. KPTL/CHN/FDN/2012- 2013 /226A/002 dated 05.11.2012 and KPTL/WO.226BA/12- 13/OW/001 dated 30.01.2013 are falling under positive service as confirmed by the lower adjudicating authority. However, for the limited purpose of reworking the liabilities and consequential modification in the penalty the appellate authority remitted the matter back to the original adjudicating authority. Aggrieved by the same the appellant has preferred this appeal and is now before this Tribunal.
5. Shri. M.N. Bharathi, Advocate appeared on behalf of the appellant and submitted as under: -
(i) That in para 10 of the impugned order the appellate authority erred in finding that the demand period started from April 2012, whereas, Notification No.30/ 2012, dated 26-06-2012 came into effect from 1-7-2012 and therefore the reverse charge was not applicable to works contract prior to that date.
Whereas, the first contract namely KPTL/CHN/FDN/2012-13/ 226A/002, dated 5-11-2012, starts from 5-11-2012 and the second contract KPTL/WO.226BA/12-13/OW/001, dated 30- 5 01- 2013, starts from 30-01-2013 and the third contract KPTL/ORAI/FDN/13-14/WO No./02, dated 15-4- 2013, starts from 15-4-2013 and thus all contracts are entitled for the benefit of the said Notification.
(ii) That in terms of clause 5.0 of concerned work order, KPTL supplied materials indicated therein, whereas in terms of clause 6.0, which indicated the scope of supply of the appellant, the appellant supplied other required materials like sand, blue metal/jalli etc. and provided sufficient skilled and efficient staff and workers. Though the same will fall under the category of works contract, however, considering the fact that the appellant was required to arrange sufficient skilled and efficient staff and workers, and had received payment based on quantum of work executed/ completed in Cubic Meter, during the period from July 12 to March 13, the appellant treated the said work order as pure labour contract under manpower supply and paid service tax on 25% of the value in terms of Notification 30 /2012-ST, since the appellant was a partnership concern and the service receiver was a private limited company. The service receiver paid service tax under RCM on 75% of the value of taxable service in terms of the aforesaid Notification 30/ 2012- ST and thus both the appellant and the recipient have together discharged the entire service tax liability on the aforesaid activity in terms of the said Notification 30/2012-ST. That therefore, demanding tax on the same activity yet again on the appellant amounts to double taxation and is impermissible in law. 6
(iii) That in terms of clause 2 of the work order and appendix 2 of the same, it can clearly be seen that the entire work was rendered under the control and supervision of the personnel of Kalpataru. Therefore, the assumption of the appellate authority that the work was not done under the control and supervision of Kalpataru and that therefore the appellant is not eligible to classify such service under manpower supply is contrary to facts and therefore not maintainable.
(iv) That for the period from 1-4-2013 to November 2014, the appellant classified the services under works contract as per instructions of Kalpataru. Since, in terms of clause 6 of the said work order, the appellant supplied other required materials like sand, blue metal/jalli, etc. Thus, categorizing the activity as works contract service, the appellant has paid service tax on 50% of value in terms of Notification 30/2012- ST. Since, the appellant was a partnership contractor and the service receiver Kalpataru was a private limited company. The service receiver has paid service tax under RCM on the balance 50% of the value of taxable service in terms of the said Notification. And thus, the appellant has correctly discharged its liability for the work order under KPTL/.226 BA /12-13/OW /001 dated 5-11-2012. That in respect of the said contract, the entire bill value was subjected to service tax partially in the hands of the appellant and partially by KPTL, partially by Kalpataru under RCM in terms of the Notification 30/2012 ibid, which is evidenced by the chartered accountant certificate issued by Kalpataru, which was produced by the 7 appellant both before the original authority as well as the appellate authority. In other words, the demand upheld is nothing but demand on the portion of bill value on which Kalpataru has already paid service tax under RCM. And therefore, raising the demand once again, ignoring the payment made is not maintained.
(v) As regards the work order, KPTL/WO.226 BA/12-13/OW/ 001 dated 30-01-2013 and KPTL/ORAI/FDN/13-14/WONO/02 dated 15-04-2013, as is evident from the terms thereof, the work was executed utilizing material and manpower supplied by the appellant and hence the appellant had correctly classified it as works contract service and had discharged its service tax liability by paying service tax on 50% of the taxable value, with the balance 50% percent taxable value being subjected to service tax liability that is to be paid by Kalpataru under RCM. Thus, there was no liability of service tax that was required to be discharged by the appellant.
(vi) That the entire service tax liability as demanded in the RCM has already been fully discharged by both appellant and Kalpataru as per the respective share as specified in the Notification 30/2012-ST. And thus no further amount is due to the government in respect of the said taxable service.
(vii) That the appellant relies on the analogy of CBEC Circular F. No. 341/18/2004. TRU (Pt) dated 17/12/2004 which had clarified in para 5.7 in the context of GTA service) that, "If service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, 8 service tax should not be charged for the same amount from any other person, to avoid double taxation."In this regard, reliance is placed on:-
➢ Siddhi Ferrous LLP Versus Commissioner of CE & ST. Daman, 2024 (11) TMI 1184 CESTAT AHMEDABAD ➢ Zyeta Interiors Pvt Ltd. Versus Vice Chairman Settlement Commission, CHENNAL 2022 (58) G.STL 151 (Kar) ➢ The Vice Chairman Settlement Commission. The Principal Commissioner of GST and Central Excise Bangalore Versus M/s Zveta Interiors Pvt Ltd. 2022 (4) TMI 774 KARNATAKA HIGH COURT ➢ Transpek Silox Industries Pvt Ltd Versus Commissioner. Of C. EX, Vadodara-t 2018 (17) G.STL 434 (Tri Ahmd)
(viii) That extended period of limitation is not invokable as the tax demand raised by the department is entirely based on the documents such as invoices, work orders and other records, all of which were voluntarily provided by the appellant and the department has not brought forth any new or independent material that was not already disclosed by the appellant. That judicial precedents are relied upon to contend that in the absence of any independent or undisclosed material, when the demand is based only on documents provided by the appellant, the charge of suppression cannot be sustained, placing reliance on:-
➢ M/s RR Polymers Versus the Commissioner OF GST & CENTRAL EXCISE, Madurai. 202511) TMI 1375-CESTAT CHENNΑΙ 9 ➢ M/s Xomox Sanmar Ltd. Versus The Commissioner Of GST & Central Excise Tiruchirapalli, 2025 (1) TMI 1318 CESTAT CHENNAI ➢ Uniworth Textiles Ltd Vs Commissioner of Central Excise. Raipur reported in 2013 (288) ELT 161 (S.C) ➢ Karur & Singh Vs Collector of Central Excise, New Delhi reported in 1997 (94) ELT 289 (S.C ➢ Cosmic Dye Chemical Vs Collector of Central Excise, Bombay reported in 1995 (75) ELT 721 (SC) reported in 1995 (75) ELT. 721 (S.C)
6. Ms. Anandalakshmi Ganeshram, Ld. Authorised Representative, appeared on behalf of the respondent and reiterated the findings in the impugned order in appeal.
7. Heard both sides. Perused the appeal records as well as the case laws submitted as relied upon.
8. The issue that arises for our consideration is whether the demand of service tax made on the appellant, by denying the classification adopted by the appellant for the services provided, is tenable when the service tax liability on the consideration paid to the appellant for the services provided already stood discharged by the appellant as well as the service receiver under reverse charge mechanism as per the respective stipulated percentages specified in Notification No.30/2012-ST dated 20-06-2012, as per the classification already adopted by the appellant.
10
9. We find that the appellant has relied on a decision in Zyeta Interiors Pvt Ltd v Vice Chairman Settlement Commission, Chennai, 2022 (28) GSTL 151 (Kar), and the relevant portion therein, at para 4(b), is reproduced hereinunder:
"There is also some force in the contention of the assessee that the entire amount due by way of tax having already reached the Exchequer, the assessee could not have been called to make the payment once over; petitioners had availed manpower services and in terms of Section 68(2) of the Finance Act, 1994, 50% of the tax due was paid by the assessee and the remaining 50% was remitted by the service provider; however, w.e.f. 20-6-2012 vide Notification No. 30/2012-S.T., this ratio was altered to 75:25 upto 1-4-2015 between the consumer & the service provider; further, it was changed to 100% qua the consumer w.e.f. 1-4-2015; however, inadvertently, the Assessee continued to pay 50% and the service provider paid the remaining 50%; thus, whatever is due to Ceasar has reached his hands, is true; in fact, the C.B.E. & C. vide Circular No. 341/18/2004 had clarified that the reverse charge mechanism should not lead to double taxation; in other words, once the tax liability is discharged regardless of the persons who discharge, the assessee cannot be asked to pay the tax again."
We note that a similar view has also been taken by a coordinate bench of the Tribunal in Siddhi Ferrous LLP v Commissioner of CE & ST, Daman, 2024 (11) TMI 1184-CESTAT Ahmedabad. 11
10. Furthermore, it is seen from the impugned order in appeal that the appellate authority, despite noting that the appellant has raised a ground that the appellant has produced a certificate of the service recipient's chartered accountant to the effect that tax under partial reverse charge has been paid by the recipient of the service, M/s. Kalpataru Power Transmission Ltd; has neither rendered any finding in this regard nor controverted the certificate produced. The Hon'ble Madras High Court has in P.P. Products Ltd v.CC, Chennai, 2019 (367) ELT 797 (Mad) observed that disbelieving CA Certificate without any material against it is also not justified. Decisions in Hero Motocorp Ltd v CC,2014 (302) ELT 501 (Del) and in CC, Kolkata V v. M/s.Gorsia Handicrafts and Design Pvt Ltd, 2020-TIOL-467-CESTAT-KOL, too are on similar lines. Thus, when the CA Certificate evidences that the service receiver has also discharged the service tax liability under reverse charge mechanism and when the appellant too has discharged its liability of applicable percentage, we find considerable force in the appellant's contention that when the entire demand on the consideration received by the appellant stood discharged in this manner, demanding service tax once again would not be tenable. The reliance placed by the appellant on the Letter of the Central Board of Excise and Customs dated 17- 12-2004, in the context of levy of service tax on GTA Services, wherein it has been stated that if service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, service tax should not be charged for the same 12 amount from any other person, to avoid double taxation; would show that the Board itself has cautioned its officers on field against double taxation.
11. In the aforesaid circumstances, respectfully following the decisions of the Karnataka High Court and the coordinate bench decisions cited above, we hold that in the instant case since the balance portion of the service tax liability, apart from that which the appellant has already discharged, is shown to have been discharged by the appellant's service recipient, as evidenced by the CA certificate, the appellant cannot be asked to pay the service tax on the same yet again.
12. We also notice that the appellate authority has categorised the service of the appellant under works contract service while denying the classification of manpower recruitment service claimed by the appellant when it had availed the notification No.30/2012-ST dated 20-06-2012. In this regard, we find that the decision of the Tribunal in CST New Delhi v Air Charter Services P Ltd, 2017 (5) GSTL 107 (Tri-Del) is apposite. In the said decision of Air Charter Services P Ltd, a coordinate bench of the Tribunal has held that tax already paid under a wrong category can always be considered towards the liability under the new category. Similar view is also seen to have been taken by the Mumbai Bench if this Tribunal in Owens Corning ( I) Ltd v. CST, Mumbai II, 2019 (30) GSTL Part 4 J 144. It is pertinent that there is no allegation that the Appellant has not discharged the service tax liability under 13 the classification that it had claimed. It is a settled principle of law that technicalities should not defeat rendering of complete justice to the litigant, Aurangabad Electricals (P) Ltd v Commr of C.Ex & Cus, Aurangabad, 2010 (260) E.L.T. 24 (S.C.) refers. As evidenced by the CA certificate, the entire service tax liability on the services rendered by the appellant stood discharged. Therefore, we find the directions of remand in the impugned order in appeal otiose and untenable. When the state deals with the citizen it should not ordinarily rely on technicalities, the Apex Court decision in Committee-GFIL v. Libra Buildtech Private Limited & Ors, (2015) 16 SCC 31 refers. It would also be apposite to remember the exhortation of the Honourable Apex Court in Union of India v A.V. Narasimhalu, 1983(13) ELT 1534 (SC), viz., that " We trust that the Administrative authorities will act in a manner consistent not with technicalities, but with a broader concept of justice if a feeling is to be nurtured in the minds of the citizens that the Government is by and for the people."
13. That apart, we also note that the demand has been premised on the ST-3 returns filed by the appellant and there is no evidence adduced of any positive act of deliberate suppression of facts or wilful misstatement with intent to evade payment of duty having been made by the appellant. It is a settled position in law that it is for the Department to take up the scrutiny of the returns as per extant departmental instructions to examine the exemption 14 claimed, the correctness of the duty paid etc., and to raise demand if any. We have consistently expressed such a view in Final Order No.41524/2024 dated 28-11-2024 in the case of M/s. Xomox Sanmar Ltd, Unit II v. Commissioner of CGST & Central Excise, Trichy, Final Order No.40567/2025 dated 30.05.2025 in the case of M/s. Nobel King Purchase Solutions Pvt Ltd v Commissioner of GST and Central Excise, Chennai and in Final Order No.40664/2025 dated 26-06-
2025 in the case of M/s. Exide Industries Ltd v Commissioner of GST and Central Excise, Salem. We also note that in the decision reported in Uniworth Textiles v CCE, Nagpur, 2013 (288) ELT 161 (SC), relied upon by the appellant, while considering the ingredients required to invoke the extended period of limitation, the Supreme Court observed that it is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. The Apex Court referred to its decision in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 wherein it was held that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." Therefore, on the plea on invoking of the extended period of limitation, we cannot but hold in the appellant's favour.
15
14. In light of our discussions above, we hold that the impugned Order in Appeal is unsustainable and is liable to be set aside. Ordered accordingly. The appellant succeeds in its appeal on merits as well as on its plea against invoking the extended period of limitation.
The appeal is allowed with consequential relief in law, if any.
(Order dictated and pronounced on 09.07.2025) (AJAYAN T.V.) (VASA SESHAGIRI RAO) Member (Judicial) Member (Technical) psd