EMM AAR EI PVT LTD vs DELHI SOUTH

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH-COURT NO. III

SERVICE TAX APPEAL NO. 51540 OF 2019
[Arising Out Of Order in Original No. 52-32/Commr/RK/Audit-II/2018-
19 dated 28.02.2019 passed by the Commissioner of Central goods and
Service tax, Audit II, New Delhi]

M/S. EMM AAR EL Constructions Pvt. Ltd. …..APPELLANT
S-8&9, HL Plaza, Plot No.9
Sector 12, Dwarka, Delhi 110075

Vs.


COMMISSIONER OF CGST &CX (Audit II) …..RESPONDENT
st
1 Floor, EIL Annexe Building, Bhikaji Cama Place,
R K Puram, New Delhi 110066

WITH

SERVICE TAX APPEAL NO. 51306 OF 2019
[Arising Out Of Order in Original No. 52-32/Commr/RK/Audit-II/2018-
19 dated 28.02.2019 passed by the Commissioner of Central goods and
Service tax, Audit II, New Delhi]


Mr. Anil Lohchab …..APPELLANT
Flat No. 2305, Sleuth CGHS, Plot No.6,
Sector 19-B, Dwarka, New Delhi 110075

Vs.


COMMISSIONER OF CGST &CX (Audit II) …..RESPONDENT
st
1 Floor, EIL Annexe Building, Bhikaji Cama Place,
R K Puram, New Delhi 110066

AND

SERVICE TAX APPEAL NO. 51307 OF 2019
[Arising Out Of Order in Original No. 52-32/Commr/RK/Audit-II/2018-
19 dated 28.02.2019 passed by the Commissioner of Central goods and
Service tax, Audit II, New Delhi]

Mr. Rajinder Singh Lohchab …..APPELLANT
House No. 1095, Sector I, HUDA,
Rohtak, Haryana 124001


Vs.

COMMISSIONER OF CGST &CX (Audit II) …..RESPONDENT
st
1 Floor, EIL Annexe Building, Bhikaji Cama Place,
R K Puram, New Delhi 110066

Appearance:
Mr. Abhas Mishra, Advocate for the appellants

Mr. Rajiv Kapoor, Authorised Representative for the Department

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ST/51540/2019 & 2 other

CORAM:
HON'BLE MR. AJAY SHARMA, MEMBER (JUDICIAL)
HON'BLE MR. P.V.SUBBA RAO, MEMBER ( TECHNICAL )

FINAL ORDER NO’S. 51703-51705 /2026
DATE OF HEARING : 3/11/2026
DATE OF DECISION : 05/11/2026
P.V.SUBBA RAO

1
1. The order dated 28.02.2019 passed by the Commissioner
deciding the proposals made in the show cause notice dated
22.4.2016 read with the corrigendum dated 18.12.207 and the
Statement of Demand dated 11.4.2018 issued to the appellants
2
is assailed by M/s EMM AAR EL Construction Pvt. Ltd. , Shri Anil
3 4
Lohchab, Director and Shri Rajender Singh Lohchab, Director of
the assessee in these three appeals. The appeals of Anil and
Rajender are confined to the personal penalties of Rs. 1,00,000/-
each imposed on them under section 78A of the Finance Act,
1994 with respect to the first SCN. No penalty was imposed on
these two appellants with respect to the subsequent Statement of
Demand.
2. We have heard learned counsel for the appellants and the
learned authorized representative for the revenue and perused
the records.
3. The officers of the service tax department received

information that the assessee was providing taxable services
such as ‘Construction services other than residential complex,
including commercial/industrial buildings or civil structures’, and
‘Works Contracts services’ but was not registered with the service

1 Impugned order
2 Assessee
3 Anil
4 Rajender

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ST/51540/2019 & 2 other
tax department nor was it paying service tax. Detailed
investigation was conducted and statements of various persons
were recorded and it was found the appellant had provided
services as sub-contractors to M/s.Steel Authority of India Ltd.
(SAIL) at Bhilai and as a sub-contractor of National Thermal
Power Corporation (NTPC) at Raigarh. The turnover of the
appellant was significant for the period of dispute viz., 2010-11
to 2015-16.
4. Therefore, the SCN was issued proposing to recover service
on the value of taxable services provided under the proviso to
5
section 73(1) of the Finance Act, 1994 along with interest
under section 75 of the Act. Penalties were proposed to be
imposed under sections 76, 77(1) (a), 77(1) (c), 77(2) and 78 of
the Act on the assessee. Personal penalties were proposed to be
imposed on Anil and Rajender under section 78A of the Act.
5. The second SCN (Statement of Demand) dated 11.4.2018
proposed recovery of service tax for the subsequent period.
6. The assessee’s position has been that it was not required to
pay any service tax because it was only the sub-contractor and
service tax on the entire value of services was paid by the main
contractors SAIL and NTPC.
Submissions on behalf of the appellants
7. Learned counsel had three primary submissions. First, that
as the sub-contractor, the assessee was not required to pay
service tax because the main contractor had paid service tax on
the entire value including the work done by the assessee as the

5 Act

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ST/51540/2019 & 2 other
sub-contractor. Thus, there was no loss of Revenue. It is his
further submission that had the assessee paid service tax, it
would have recovered it in its invoices to SAIL and NTPC who
would have taken CENVAT Credit of the tax paid by the assessee
and this would have reduced the amount of service tax paid in
cash by SAIL or NTPC. Thus, at any rate, it is revenue neutral.
8. Secondly, according to the learned counsel, during the
relevant period, there were both views- that the sub-contractor
need not pay service tax if the main contractor pays and that the
sub-contractor also has to pay service tax. In view of the
conflicting views, the matter was referred to the Larger Bench in
Commissioner of Service Tax, New Delhi vs Melange
6
Developers Pvt. Ltd. and the larger bench decided that the
sub-contractor also had to pay service tax and the main
contractor could take CENVAT credit of the tax so paid. Since
there were conflicting views even among different benches of the
Tribunal, the assessee cannot be faulted and penalized for
holding the view that it was not liable to pay service tax as a
sub-contractor. Therefore, it cannot be alleged that the assessee
had any intent to evade and in the absence of any evidence of
intent, extended period of limitation could not have been
invoked.
9. The third submission of the learned counsel is that at any
rate, the work carried out by the assessee was that of fabrication
at site which clearly amounts to manufacture. Therefore, this
activity cannot be treated as providing a taxable service.

6 2020(33) GSTL 116 (Tri-LB)

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ST/51540/2019 & 2 other
10. On a specific query from the bench, learned counsel
submitted that this ground that the activity amounted to
manufacture was not taken before the Commissioner and hence
it was not considered or examined in the impugned order.
However, learned counsel vehemently argued that this was a
purely legal ground and it goes to the very core issue as to
whether the taxable event of providing any service had occurred
at all. If this submission of the assessee is accepted, then there
will be no basis for the demand at all. Hence, it may be permitted
to be taken before this Tribunal in this appeal.
Submissions of the Revenue
11. Learned authorised representative for the Revenue, on the
other hand, vehemently supported the impugned order and
asserted that it calls for no interference. It is also his submission
that appellant cannot make out a completely new case at this
stage and argue that its activity amounted to manufacture as
such a ground was never taken during the investigation or in the
proceedings before the Commissioner.
12. Learned authorised representative further submitted that
the assessee had not even obtained a registration let alone
paying any service tax. It is only after considerable efforts and
detailed investigation, the assessee’s activities came to light.
Findings
13. We have considered the submissions advanced by both
sides. Usually, we would be reluctant to allow an appellant to
raise new grounds not taken before the lower authorities.
However, the ground taken before us is a serious legal ground

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ST/51540/2019 & 2 other
and it goes to the very core question as to whether any taxable
event exigible to service tax had taken place at all. If the activity
amounted to manufacture, it cannot be called a service either
during the pre-negative list (before 1.7.2012) or after that date.
14. However, the Commissioner never got an opportunity to
examine this submission because the assessee had not taken this
ground before him. To determine if the activity amounted to
manufacture, one needs to look into the nature of the fabrication
done by the appellant and whether any new marketable good had
arisen in the process.
15. In our considered view, the Commissioner should get an
opportunity to examine this issue and give his finding. Needless
to say that if the Commissioner finds that all the activities of the
assessee were in the nature of manufacture, no service tax can
be demanded.
16. We also find that if the activity amounted to providing a
service as a sub-contractor on which activity the main contractor
had already paid service tax, in view of the conflicting views on
the subject even by different benches of this Tribunal (until it was
resolved in Melange Developers) , extended period of limitation
could not have been invoked. For the same reason, the penalties
imposed on Shri Anil Lohchab and Shri Rajinder Singh Lohchab
under section 78A deserve to be set aside.
17. In view of the above, without passing any remarks on the
merits of the case, we remand the matter to the Commissioner to
examine the submission of the assessee that is activities
amounted to manufacture and not providing a service. We make

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ST/51540/2019 & 2 other
it clear that if any demand of service tax is confirmed, it shall be
only for the normal period of limitation.
18. Service tax appeal No. 51306 of 2019 filed by Shri Anil
Lohchab and Service tax appeal No. 51307of 2019 filed by
Shri Rajender Singh Lohchab are allowed and the penalties
against them are set aside. Service tax appeal No. 51540 of
2019 filed by M/s. EMM AAR EL Constructions Pvt. Ltd is
allowed by way of remand to the Commissioner to decide as
above and the impugned order is set aside.
[Order pronounced on 05/11/2026 ]

(AJAY SHARMA)
MEMBER (JUDICIAL)




(P.V.SUBBA RAO)
MEMBER ( TECHNICAL )
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