CHANDRA KISHORE SINGH vs ALLAHABAD- Appeal
- Court
- Customs, Excise and Service Tax Appellate Tribunal
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70219 of 2026
(Arising out of Order-in-Appeal No.43/ST/APPL/ALLD/2026 dated 15.01.2026
passed by Commissioner (Appeals) CGST & Central Excise, Allahabad)
Shri Chandra Kishore Singh, …..Appellant
(Prop. M/s Chandra Kishore Singh
LIG-5, Kalindipuram, Prayagraj, U.P.-211011)
VERSUS
Commissioner of Central Excise &
CGST, Allahabad ….Respondent
(38, M.G. Marg, Civil Lines, Allahabad211001)
A PPEARANCE :
Shri Madhukar Anand, Consultant for the Appellant
Smt. Chitra Srivastava, Authorized Representative for the Respondent
CORAM:
HON’BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
FINAL ORDER NO.- 70471/2026
DATE OF HEARING : 27.08.2026
DATE OF RPONOUNCEMENT : 22.10.2026
P. K. CHOUDHARY:
The present appeal has been filed by the Appellant
assailing the Order-in-Appeal No.43/ST/APPL/ALLD/2026 dated
15.01.2026 passed by the learned Commissioner (Appeals)
Customs, CGST & Central Excise, Allahabad.
2. The Appellant having PAN No. AAGPC2538P was engaged in
providing Work Contract Services to various Government
Departments. On the basis of third-party information, it was
revealed that he had received an amount of Rs.5,59,98,614/- in
F.Y. 2016-2017, but he neither obtained Service Tax registration
nor had paid any Service Tax. An inquiry was initiated by the
Department. In response to the same, the Appellant submitted
that he had provided the Work Contract Services to various
Government Departments. Whereas it appeared to the
Service Tax Appeal No.70219 of 2026
2
Department that the Works Contracts and payments thereof
were received in F.Y. 2016-17 and hence after amendment of
Entry No.12A in Notification No.25/2012-ST dated 20.06.2012,
such services were liable to attract Service Tax. Accordingly, a
1
Show Cause Notice dated 13.10.2021 was issued to the
Appellant proposing a demand of Service Tax amounting to
Rs.1,07,86,840/- under the provisions of Section 73(1) of the
Act with interest under Section 75 and proposal for imposition of
various penalties under Sections 77 & 78 of the Finance Act,
1994. The demand of tax was computed in the SCN in the
following manner:-
The Gross Receipts against Sale of services
Period Gross Receipts as per
26AS
As per Work Orders
2016-17 5,51,14,781 7,19,12,267
2017-18 (Up
to June, 2017)
1,03,22,376 0
Total 6,54,37,157 7,19,12,267
Determination of Tax liability
Period Gross Receipts
against sale of
Service as declared
in the Work Orders
S. Tax @
15%
(including
Cess)
Total Tax
01.04.2016
to
30.06.2017
7,19,12,267 1,07,86,840 1,07,86,840
3. On the basis of documents submitted by the Appellant, the
Adjudicating Authority decided the case vide adjudication order
No. ST-47/2021/ADC-III /04 of 2022-23 dated 30.08.2022
wherein it was held that:-
(i) The Services provided to Sr. Div. Finance Manager
(Railways) amounting to Rs.1,24,28,270/- in F.Y.
2016-17 and Rs.37,44,044/- is eligible for benefit
of exemption under entry No.14 of Notification
No.25/2012-ST dated 20.06.2012.
1
SCN
Service Tax Appeal No.70219 of 2026
3
(ii) The taxable value of Rs.7,19,12,267/- on which
demand has been made is not in accordance of
the provisions of the Act and Rules.
(iii) The Actual amount received is Rs.5,13,06,774/-
(iv) The Appellant is eligible for cum-tax-benefit as per
provisions of Section 67(2) of the Act.
And accordingly, the demand of Service Tax amounting to
Rs.45,82,762/- was confirmed alongwith interest and penalties
were imposed under Sections 78, 77(1)(b), 77(1)(c) and Section
70 of the Act. Being aggrieved, the Appellant filed an Appeal
before Commissioner (Appeals) on the ground that:-
(i) The demand of Service Tax on the Services Provided
to Agriculture Extension Services amounting to
Rs.21,76,740/- for soil conservation falls under
the category of Negative List of services under
Section 66D(i), hence non taxable.
(ii) The work contract services provided to Govt.
Departments for Construction of Hospital, Girls
Hostel etc., are duly covered under Entry No.124
hence exempted Services.
(iii) Against the Work contract Services which are
entered after 01.03.2015, an abatement of 60%
is available to arrive at the taxable value.
4. Simultaneously, the Department also preferred an Appeal
before the Commissioner (Appeals) to the extent that-
(i) The total amount received by the Appellants in F.Y.
2016-17 is Rs.4,09,54,398/- whereas in Form
26AS, the Appellant had received an amount of
Rs.5,51,14,781/-.
(ii) the Adjudicating Authority has erred in calculating
the taxable Income in r/o U.P. Project Corporation
which is declared as Rs.1,44,49,373/- whereas
Service Tax Appeal No.70219 of 2026
4
the Adjudicating Authority has wrongly mentioned
it as Rs.2,88,990/- without any reasoning.
(iii) The Gross receipt in F.Y. 2016-17 as per ITR is
Rs.5,59,98,614/- whereas the Gross receipt as
per 26AS is Rs.5,51,14,781/-. The reason for not
taking the higher value of ITR has not been
discussed.
4.1 The then Commissioner (Appeals) decided both the
Appeals i.e. Appeal of the Appellants and Appeal of the
Department, vide common Order-in-Appeal No.685 &
686/ST/Alld/2023 dated 13.01.2023 with the following
observations:-
On Appellant's Appeal:
I direct the Adjudicating Authority to examine the
Bills/Invoices relating to the Agreement /Work Orders/
Contracts, to ascertain the exact nature of activities
carried out by the appellant under said contracts, eligibility
of threshold exemption as provided under Notification
No.33/2012-ST dated 20.06.2012 and abatement as
applicable in Works Contract Service under Rule 2A (ii) of
the Service Tax (Determination of Value) Rules, 2006
[Para 4.4 of OIA] i.e. the Services provided to UP Project
Corporation, U.P. Project Corporation Unit-17 and UP State
Construction & Infrastructure Development Corporation for
which Appellant has gone into the Appeal.
On Departmental Appeal:
I find that the appellant has accepted that the receipt in
form 26 AS for the F.Y. 2016-17 of UP Project Corporation
Unit-17 as Rs.1,44,49,373/-. The Appellant has provided
before me the copy of ITR-5 for the F.Y. 2016-17. In the
Profit and loss account statement, the gross receipts from
sale of Service has been shown as Rs.5,43,76,184/-
whereas the adjudicating authority has taken
Service Tax Appeal No.70219 of 2026
5
Rs.4,09,54,398/- for calculating the tax liability for the
period 2016-17 as mentioned in para 6.5 of the OIO. This
needs fresh recalculation of far liability by the Adjudicating
Authority, [Para 4.8 of OIA]
and held that "I set aside the impugned order to the extent
of dropping of demand of Service Tax in respect of services
provided to Deputy Director Agriculture extension Services
amounting to Rs.2,83,923/- for Medhbandi and remand
the matter for de-novo adjudication to the original
Adjudicating Authority to decide the case as fresh in the
light of aforesaid observation.
4.2 The Adjudicating Authority re-decided the case vide
impugned order no. (ST-30/2023) 15 of 2024 dated 28.06.2024
observing that:-
(i) The Value of Services for consideration of Service
Tax purpose was taken to Rs.6,63,20,990/-
(Rs.5,59,98,614/- declared in their ITR for the
period 2016-17 and Rs.1,03,22,376/- in the Form
26AS for the period from 01.04.2017 to
30.06.2017).
(ii) The Services provided to Agriculture Extension are
exempted.
(iii) The services provided to U.P. State Construction &
Infrastructure Development Corporation Ltd. and
U.P. Project Corporation Ltd are not in a nature of
Governmental Authority as no specific information
is available whereby it can be seen that both
entitles are government body with 90% or more
equity controlled by the government hence, the
services claimed to be provided to the
Government a local authority or a Governmental
Authority for construction of Hospital and Govt
institutions are not covered under Entry
No.12/12A of exemption Notification No.25/2012
dated 20.06.2012.
Service Tax Appeal No.70219 of 2026
6
(iv) However, the services provided to U.P. State
Construction & Infrastructure Development
Corporation Ltd. and U.P. Project Corporation Ltd
pertains to original Work and therefore, under
Rule 2A of Service tax (Determination of Value)
Rules 2006, the value of service shall be 10% of
the total amount charged. Further, the Appellant
is eligible to the benefit of Notification
No.30/2012 i.e. Reverse Charge and only 50% of
the Tax is leviable on them.
(v) The Appellants plea that issue of leviablity of Service
Tax on the Services provided to Railway is not
acceptable. Further, only the copy of Contract in
r/o services provided to Railways has been
provided. No Bill/invoice issue by Appellant to
Railways have been provided therefore, nature of
the work cannot be ascertained. A letter was
written to Railways on 20.06.2024, to verify the
nature of service and claim of the Appellants but
Railways has not provided any reply till the date
of issuance of Order (i.e. 28.06.2024) and
therefore, he has denied any exemption
abatement and has charged Service Tax @ full
rate of tax.
(vi) The Value of Services declared in ITR of 2016-17 is
Rs.5,59,98,614/- whereas, the value of Services
in 26AS is Rs.5,51,14,781/- and there is a
difference of Rs.8,83,833/- and the Service Tax
shall be determined at full rate of tax.
4.3 Accordingly, the Adjudicating Authority confirmed the
demand of service tax (including Cesses) amounting to
Rs.39,71,959/- alongwith interest and penalty under Section 75
and 78 of the Act respectively. Besides penalty of Rs.5,000/-
each under Section 77(1)(b) and 77(1)(e) and a penalty of
Service Tax Appeal No.70219 of 2026
7
Rs.6,000/- under Section 70 of the Act was also imposed. That
being aggrieved with the impugned order, the Appellant filed the
appeal on the following grounds:-
(i) The impugned Show Cause Notice is null and void ab
initio, as it was issued in violation of mandatory
pre-SCN consultation. The Board vide Instruction
F.No.1080/09/DLA MISC 13 dated 21.12.2015,
Master Circular No.1053/02/2017-CX dated
10.03.2017 & Circular No.1076/02/2020-CX dated
19.11.2020 has made such consultation
mandatory in SCNs involving duty tax more that
Rs.50 Lakhs. Several case laws have been relied
in support of their claim namely Amadeus India
Pvt. Ltd. Vs UOI, Rochem Separation Systems Vs
UOI etc.
(ii) The demand of Service Tax confirmed through the
impugned OIO is infructuous, null and void as it
has been confirmed under the wrong provisions of
the Finance Act 1994. There is no such provision
to confirm any demand of Service Tax under
Section 74 (i) of the Act ibid.
(iii) The demand cum Show Cause Notice is barred by
limitation as there is no willful misstatement or
suppression of fact or intent to evade payment of
Service Tax. The Appellant has provided the Work
Contract Services for construction of Government
Buildings only, which were exempt to S.Tax in
terms of Entry No.12 (a) of Notification
No.25/2012 dated 20.06.2012. The Government
vide Notification No.6/2015-ST dated 01.03.15
omitted the said clause 12 (a) but again vide
Notification No.9/2016-ST dated 01.03.2016
reinserted this exemption vide entry no.12A with
retrospective effect. The act of withdrawal of the
exemption and again reinstating the same with
Service Tax Appeal No.70219 of 2026
8
certain condition, gave the general impression
that said exemption is still available or reverted
back to its original position. The Tribunals Courts
including Hon'ble Supreme Court has already held
such SCNs mill and void, which has been issued
by invoking the extended period of Limitation,
wherein there is no suppression or willful
misstatement or intent to evade payment of tax,
on the part of Taxpayer as is in the present case.
(iv) The Adjudicating Authority while passing the
impugned OIO dated 28.06.2024 has travelled
beyond the directions of the Commissioner
(Appeals) as mule while remanding the case for
de nova adjudication. The Original Adjudicating
Authority while passing the OIO dated 30.08.2022
held that the amount of Rs.1,61,72,264/-
received from Indian Railways, during impugned
period of demand falls under the category of
exempted services in terms of Entry No.14 of the
Exemption Notification No.25/2012-ST dated
20.06.2012, hence not taxable. The said issue
was accepted by the Reviewing Authority i.e.
Commissioner, CGST & C.Ex. Allahabad. The
Commissioner (Appeals) in his OIA dated
13.01.2023 has directed to decide the case a
fresh in the light of aforesaid Observations (i.e.
observations made on the Party's Appeal and
observations made in Departmental appeal).
However, as demanded the copy of agreement/
bond No.74-W/8860/Bills Dt. 19.8.13 for
Rs.2,29,00,000/- (Tender No-1720132014) for
construction of New Training School with Hostel
and a Contract No.74-W/9359/Bills Dt. 27.10.16
(Tender No-0320162017) for Rs.2,920,9,267/- for
providing Augmentation of IRIMTC by providing
Hostel No.3 for 80 candidates were also submitted
Service Tax Appeal No.70219 of 2026
9
with copies of Form 26AS for the F.Y. 2013-14 to
F.Y. 2016-17 to prove that whatever amount has
been received from Railways pertains to those
contracts only. The A/A wrote a letter to DRM on
20.06.2024 and without waiting for a reply or
without giving a reminder passed the OIO on
28.06.2024 confirming the demand of Service Tax
of Rs.24,25,840/- on the Services provided to
Railways. Such confirmation of demand is neither
legal nor proper.
(v) The Adjudicating Authority in the OIO has
determined the Service Tax liability on receipt of
Rs.5,51,14,781/- as shown in Form 26AS.
Further, he has observed that in FY. 2016-17,
there is a receipt Rs.5,59,98,614/- in ITR whereas
receipt in Farm 26AS is only Rs.5,51,14,781/-
only. Therefore, there is an excess, receipt of
Rs.8,83,833/- in ITR and accordingly he has
determined the Service Tax liability of
Rs.1,32,575/- on the said receipt at full rate of
tax in the impugned OIO. The observation is
factually incorrect as the ITR for F.Y. 2016-17
clearly shows a receipt of Rs.5,43,76,184/- This
fact has already been observed by the
Commissioner) Appeals) in para 4.8 of the OIA
dated 13.01.2023. Hence, demand of
Rs.1,32,575/- confirmed in the impugned OIO is
neither legal nor proper.
(vi) The receipt of Rs.2,43,38,263/-in r/o of contracts
entered prior to 01.03.2015 with U.P. Project
Corporation / U.P. State Construction for
construction of Government Buildings are exempt
to service tax under Entry No.12/12 A and Entry
No.29 (h) of Exemption Notification No.25/2012-
ST dated 20.06.2012 and therefore, confirmation
of demand of Service Tax amounting to
Service Tax Appeal No.70219 of 2026
10
Rs.7,30,147/- is neither proper nor legal and
needs to be set aside;
(vii) While arriving at the Tax liability on the Services
provided to U.P. Project Corporation / U.P. State
Construction for construction of Government
Buildings against the contracts entered after
01.03.2015, the benefit of Cum Tax value must
be provided as we have not collected any Service
tax from the service recipients. The earlier
Adjudicating Authority in his OIO dated
30.08.2022 has already allowed the benefit of
cum Tax duty. While reviewing the said OIO, no
infirmity on this ground was identified and no
such mention is there in ST-4 appeal filed by the
department, then in de novo adjudication not
allowing cum tax benefit is neither proper nor
legal.
(viii) The Appellant is entitled to avail the threshold
exemption of Rs.10 lakh under Notification
No.33/2012-ST dated 20.06.2012 and
accordingly, the demand amount needs to be
rectified accordingly.
4.4 During de-novo proceedings, the Adjudicating Authority
specifically sought documentary evidence to establish the exact
nature of services rendered to Railways. The Appellant although
submitted various documentary evidences to establish that the
services provided were covered under Entry 14 of Notification
No.25/2012-ST. But to verify its genuineness they failed to
submit, such documents which were sufficient enough to
conclusively prove that the Appellant rendered services to
Railways. I find that the Appellant has failed on this score.
Confirmation from Railway was also sought by writing a letter on
20.06.2024 but no reply was received. In absence of verification
from Railways, the Adjudicating Authority was justified in
Service Tax Appeal No.70219 of 2026
11
treating the services as taxable. Hence, demand confirmed on
services provided to Railways is legally sustainable.
4.5 The Appellant has claimed in the appeal that they have
provided their services to M/s U.P. Project Corporation and M/s
U.P. State Construction And Infrastructure Development
Corporation Limited for construction of Govt. Buildings namely
Government Hospitals/ Community Health Centre, Government
Offices / Fire Brigade Offices and Government residential
buildings, Government Schools etc falling under the category of
a civil structure or any other original works meant predominantly
for use other than for commerce, industry, or any other business
or profession, a structure meant predominantly for use as (i) an
educational, (ii) a clinical, or a residential complex
predominantly meant for self-use or the use of their employees
or other persons specified in the Explanation 1 to clause (44) of
Section 65 B of the Finance Act, 1994.
4.6 They have further claimed that in r/o services provided to
M/s U.P. Project Corporation, out of total receipt of
Rs.2,21,32,952/- in F.Y. 2016-17, an amount of
Rs.1,89,93,806/- has been received against the contracts
awarded prior to 01.03.2015. Similarly, in F.Y. 2017-18 (upto
June, 2017) out of total receipt of Rs.61,18,720/- an amount of
Rs.53,44,457/- have been received against the contracts
awarded prior to 01.03.2015. They have submitted the copies of
contracts with the claim that they are entitled to avail the benefit
of Entry No.12(a) read with Section 102 of the Finance Act,
1994, and Entry No.29(h) of Exemption Notification No.25/2012
dated 20.06.2012 and therefore, the amount received and the
Services provided M/s U.P. Project Corporation against the
contracts work orders which were received prior to 01.03.2015
for which an amount of Rs.1,89,93,806/- was received in F.Y.
2016-17 and Rs.53,44,457/- was received in F.Y. 2017-18 (April'
17 to June '17) are not leviable to any Service Tax.
4.7 The learned Commissioner (Appeals) vide the impugned
Order-in-Appeal has observed as under:-
Service Tax Appeal No.70219 of 2026
12
“5.11 Now coming to the issue of cum-tax-benefit I find
that the same is not automatic and depends upon factual
establishment that tax was not collected separately. In the
present case, the Appellant has failed to conclusively
establish that amounts received were inclusive of service
tax. Further, threshold exemption under Notification
No.33/2012-ST dated 20.06.2012 is not available once
taxable turnover exceeds the prescribed limit. Accordingly,
denial of these benefits by the Adjudicating Authority is
upheld.
5.12 Also I find that there is no records as granting pre
SCN consultation in the impugned SCN although CBEC's
various instructions envisage pre SCN consultation for SCN
of more than 50 lakh rupees as compulsory. I am of the
opinion that pre SCN consultation is not necessary in the
facts and circumstances of the impugned SCN. The Board
in its circular has already clarified that exclusion from this
process is case specific and in case of fraud and collusion
case such consultation is not necessary Hence, I do not
take cognizance of this issue raised by the appellant.
6.0 I hereby reject the appeal filed by the appellants and
uphold the impugned order to be legal and proper. The
appeal filed by the appellant is rejected.”
Hence the present appeal before the Tribunal.
DATE List of Events
Sl
No.
1 14.10.2021
A Show Cause Notice No. Nil dated 14.10.2021
was proposing a demand of Rs.1,07,86,840/-
with imposition of various penalties. Demand
F.Y. 2016-17 and F.Y.2017-18 upto June,
2017
2 30.08.2022 The Ld. Adjudicating Authority passed the first
Order-in-Original No. ST-47/2021/ADC-
III/04of2022-23confirming the demand of
S.Tax of Rs.45,82,762/- and also imposed
Penalty of Rs.46,52,762/-
Service Tax Appeal No.70219 of 2026
13
3
Appellant filed
Aggrieved by the said Order-in-Original, the
Appellant as well as Department both filed an
appeal before the Ld. Commissioner(Appeals) on
31.10.2022 & 9.12.2022 respectively
Appeal-
31.10.2022 &
Deptt. filed
appeal -
09.12.2022
4 13.01.2023
The Commissioner (Appeals) decided both the
Appeals by Single OIA No.685 & 686 dated
13.01.2023, setting aside the first Order-in-
Original and remanding the matter to the Ld.
Adjudicating Authority for de-novo adjudication
with certain directions.
5 28.06.2024
Pursuant to the remand, the Adjudicating
Authority passed the second Order-in-Original
(De-novo) No.(ST-30/2023) 15 of 2024 by
confirming the demand of Rs.39,71,959/-with
imposition of Penalty of Rs.40,41,959/-
against the Appellant.
6 01.10.2024
Being aggrieved by the de-novo order, the
Appellant again filed an appeal before the Ld.
Commissioner (Appeals).
7 15.01.2026
The Ld. Commissioner (Appeals) passed the
second and impugned Order-in-
AppealNo.43/ST/APPL/ALLD/2026 dated,
dismissing the Appellant's appeal and
upholding the de-novo adjudication order.
8 18.04.2026
The Appellant, being aggrieved by the
impugned Order-in-Appeal, is preferring the
present appeal before this Hon’ble Tribunal.
5. Heard both the sides and perused the appeal records.
6. I find that the Appellant had provided Work Contract
Services to the following Service recipients:-
(i) Indian Railways;-- for construction
of Railway Training School & Hostel
(ii) M/s U.P. Project Corporation; --
Structure meant for Clinical
Establishment / Educational
Establishments, Structure meant for
State Govt. Offices and Residential
Quarters for state Govt. Staff only.
(iii) U.P. State Construction &
Infrastructure Development
Corporation for Construction of
Government Clinical Establishments
only
(iv) Agriculture Extension :- for Water
Conservation, -Demand already
Service Tax Appeal No.70219 of 2026
14
st
dropped by 1 Appellate authority
vide his OIA dated 13.01.2023
7. Following issues are to be decided in the present appeal :-
(i) Whether the Work Contract services Provided
to Indian Railways are liable to attract
Service Tax or not?
(ii) Whether the benefit of Exemption under Entry
No.12 A of Notification No.25/2012 can be
provided against the Work Contract services
provided to U.P. Project Corporation in
respect of work Contracts entered prior to
01.03.2015 for Construction of Government
Clinical / Govt. Educational establishments
and Government Offices and Residential
Buildings ?
(iii) Whether the benefit of Cum Tax value can be
provided for the Work Contract services
provided to U.P. Project Corporation / U.P.
State Infrastructure &Development
Corporation / U.P. Project Corporation Unit
17 for the contracts awarded after
01.03.2015 for Construction of Govt.
Buildings?
(iv) Whether the turnover of Rs.5,59,98,614/- is
shown in the ITR of F.Y. 2016-17? and if so,
the receipt shown in Form 26AS
[Rs.5,51,14,781/-]do not capture an amount
of Rs.8,83,833/- on which Service Tax is
leviable at full rate of tax ?
(v) Whether Appellant is entitled to avail the
benefit of Threshold exemption in F.Y. 2016-
17?
ISSUE -1
8. I find that the services provided to the Indian Railways are
unequivocally exempt from Service Tax under Entry No.14(a) of
Service Tax Appeal No.70219 of 2026
15
the Mega Exemption Notification No.25/2012-ST dated
20.06.2012, which exempts services by way of construction of
original works pertaining to railways. Further, "Railways” has
not been defined in the Finance Act, 1994 . However, the
same has been defined under Section 2 of the Railway Act, 1989
as –
"( 31 ) "railway" means a railway, or any portion of a
railway, for the public carriage of passengers or
goods, and includes --
(a) all lands within the fences or other
boundary marks indicating the limits
of the land appurtenant to a railway;
(b) all lines of rails, sidings, or yards, or
branches used for the purposes of, or
in connection with, a railway;
(c) all electric action equipment, power
supply and distribution installations
used for the purposes of, or in
connection with, a railway;
(d) all rolling stock, stations, offices ,
warehouses, wharves, workshops,
manufactories, fixed plant and
machinery, roads and streets,
running rooms , rest houses,
institutes, hospitals, water works
and water supply installations, staff
dwellings and any other works
constructed for the purpose of, or
in connection with, railway;
9. I find that the works executed by the Appellant, namely
the Construction of a new Training School and a new
Hostel, fall squarely within the definition of "railway" as
Service Tax Appeal No.70219 of 2026
16
provided under Section 2(31) of the Railway Act, 1989.
The details of the agreements against which we have received
amount in the impugned period of demand / earlier period is as
under: -
S
N Contract Bond
Payment received against contracts in the Financial Year[26AS
Nature of Work Contract
Statement] (In Rs)
No.
amount
(in Rs)
2013-14 2014-15 2015-16 2016-17 April to
June 17
1 74-
W/8860/Bills
Dt.19.8.13
(Tender No-
1720132014)
Provision of
Training School&
Hostel in lieu of
existing
Training School at
Manauri
(Construction of
New Training
School)
2,29,00,000 17,65,918 1,24,59,816 53,35,920
1,24,28,220 37,44,044
2 74-
W/9359/Bills
Dt.27.10.16
(Tender No-
0520162017)
Augmentation of
IRTMTC by
Providing Hostel No
3 for 80
candidates
(Construction of
Hostel)
2,92,09,267 - - -
Total 5,21,09,267 17,65,918 1,24,59,816 53,35,920 1,24,28,220 37,44,044
10. I find that further by confirming demand on services
provided to railways, the Adjudicating Authority, acted beyond
the scope of the remand directions given by Commissioner
(Appeals). The leviability of the services provided to Railways
st
was already held exempted by the 1 Adjudicating Authority vide
his Order dated 30.08.2022. This finding was not challenged by
the Department in its appeal and had thus attained finality. The
learned Adjudicating Authority, in the de-novo proceedings,
acted without jurisdiction by travelling beyond the scope of the
remand directions given by the learned Commissioner (Appeals)
in the first OIA dated 13.01.2023. The Adjudicating Authority
illegally re-opened and confirmed a demand of Rs.24,25,840/-
on services rendered to the Indian Railways. This issue had
already been decided in the Appellant's favour in the first OIO
dated 30.08.2022, wherein the services were held to be exempt.
Service Tax Appeal No.70219 of 2026
17
Adjudicating Authority acting on a remand is bound by the
directions of the Appellate Authority and cannot expand the
scope of the proceedings to re-visit settled issues. This action is
a gross violation of judicial discipline and hierarchy, as held in:-
(i) Viny Royal Plasticoates Private Ltd. Vs
U.O.I. [2010 (258) E.L.T. 339 (Guj.)]
(ii) Advance Petrochemicals Ltd. Vs
Commr of Customs, Ahmadabad
[2009 (247) E.L.T. 300 (Tri. -
Ahmd.).
(iii) DCIT Vs. M/s. ACC Ltd. Appeal
Number: ITA No.3787/Mum/2009,
ITA No.4241/Mum/2007 & ITA
No.4987/Mum/200- ITAT Mumbai.
11. I find that the Department is barred by the principle of
estoppels from re-agitating the issue of exemption for services to
Indian Railways. Having accepted the finding of the first
Adjudicating Authority by not challenging it in their appeal, the
department cannot be permitted to benefit from the de-novo
authority's act of illegally re-opening the said issue. The learned
Commissioner (Appeals) has gravely erred in the impugned order
by upholding such an illegal and arbitrary confirmation of
demand. In the light of above, no service Tax is leviable on the
Service s provided to Indian Railways and demand confirmed in
nd nd
the impugned 2 OIO and upheld by 2 OIA needs to be set
aside.
Issue No.2
12. I find that the Appellant has provided the Work Contract
Services to M/s U.P. State Project Corporation for construction of
government buildings for use other than Commerce/or Industry
or Business or profession. They have also constructed
Government Clinical / Educational Establishments. The Appellant
Service Tax Appeal No.70219 of 2026
18
have received an amount of Rs.2,21,32,884/- in F.Y. 2016-17 and
Rs.61,18,720/- in April, 2017 to June, 2017 in the following manner :-
F.Y.-2016-17
Total Amount Received - Rs.2,21,32,884 /-
(A) Out of above, the Amount Received
in r/o contracts awarded /prior to
01.03.2015 – Rs.1,89,93,806/-
(B) Amount Received in r/o Contracts awarded
after 01.03.2015 - Rs.31,39,078/-
F.Y-2017-18(April’17 to June’17)
Total Amount Received-Rs.61,18,720/-
A. Out of above, the Amount Received in
r/o contracts awarded prior to
01.03.2015- Rs.53,44,457/-
B. The amount Received against the Contracts
awarded
after 01.03.2015- Rs. 7,74,263 /-.
Further, in this regard the Project Manager of U.P. Project
Corporation has also submitted a Certified Chart wherein against
each and every payment made to the Appellant in F.Y. 2016-17
and F.Y. 2017-18, the details of the Contract / Work Order No
against which such payment was made as well as Nature of work
is clearly mentioned in the appeal memorandum.
13. I find that a substantial portion of the receipts, amounting
to Rs.2,43,38,263/- pertains to contracts awarded by M/s U. P.
Project Corporation prior to 01.03.2015 for work contract
services for the construction of government buildings for non-
commercial use educational / clinical establishments are
specifically exempt from Service Tax by virtue of Entry No.12A
Service Tax Appeal No.70219 of 2026
19
inserted vide Notification No.9/2016-ST read with the
retrospective validation provided under Section 102 of the
Finance Act, 1994. The benefit of Exemption available under
Entry No.12A of Notification No.25/12 for the work Contract
which were awarded prior to 01.03.2015 were denied by the
nd
Adjudicating Authority [Para 4- Page 120 of 2 OIO / Page 120
of MOA] as well as the Appellate Authority holding that mere
Government Ownership does not automatically qualify as
entity as Govt. for the purpose of Exemption under
Notification No.25/ 12 in the appeal memorandum.
14. I find that U.P. Project Corporation is "Governmental
Authority" as defined in Notification No.25/2012-ST, being State
Government undertakings with over 90% equity. The services
were for the construction of non-commercial Government
buildings like Government Offices, Residences for Govt. Staff &
Clinical as well as Clinical and Educational Establishments which
are squarely covered by the exemption under Entry No.12/12A
of Notification No.25/2012-ST. Reliance is placed on the
decisions :-
(i) Kanubhai Ramjibhai Makwana Vs.
C.C.E. & S.T. Vadora- I
[2022(8)TMI645 (CESTAT-
Ahmedabad)] and
(ii) Krishi Constructions Pvt. Limited
Vs. Commissioner of Central Tax
Hyderabad [2020 (9) TMI 837
(CESTAT-Hyderabad)].
15. I find that the Appellant is eligible for exemption as a sub-
contractor under Entry No.29(h) of Notification No.25/2012-ST.
The Appellant provided works contract services to prime
contractors (U.P. Project Corporation etc.), who in turn provided
exempt works contract services to the Government of Uttar
Pradesh. The benefit of exemption to a sub-contractor providing
Service Tax Appeal No.70219 of 2026
20
services to a main contractor who is providing an exempted
service is a settled principle of law, which has been ignored by
the authorities below. The services provided by the main
contractors (U.P. Project Corporation etc.) to the Government
were exempt, and therefore, the services of the Appellant are
consequently exempt. I find that the learned Lower Authorities
have erred in denying the exemption for Works Contract Services
provided to M/s U.P. Project Corporation Ltd. and M/s U.P. State
Construction & Infrastructure Development Corporation Ltd on
the ground that body corporate must be involved in carrying out
any of the function entrusted to a municipality and therefore it
will not fall under Government Authority. The Adjudicating
Authority has not appreciated the fact that the Tribunal in its
order in the case of Keen & Core Developers Vs.
Commissioner of CGST, Greater Noida [ 2024 (3) TMI758-
CESTAT Allahabad ] has held that-
“7……………………. As long as the service is rendered to a
client, the taxability has to be decided accordingly
regardless of whether the service was rendered directly
by the main contractor or through a subcontractor or
through a sub-sub-contractor. Accordingly, we find that
the Appellant is not liable to pay service tax as he has
already paid the same and he is entitled to refund under
Section 102 of the Finance Act, 1994.
8.We also find that the issue is no more res integra and
is squarely covered by the judgement of Hon’ble
Supreme Court in the case of Commissioner, Central
Excise & Service Tax, Patna vs. M/s Shapoorji
Pallonji And Company Pvt. Ltd . [ 2023(10) TMI
748 – S.C]. being Civil Appeal No.3991/2023 & Civil
Appeal No.3992/2023 judgment dated 13.10.2023.”
16. Further the Hon’ble Supreme Court in the Case of
Commissioner, Central Excise & Service Tax, Patna vs.
M/s Shapoorji Pallonji And Company Pvt. Ltd .
Service Tax Appeal No.70219 of 2026
21
[ 2023(10)TMI 748 – S.C] has upheld the Order of Patna High
Court and on the issue of definition of Government Authority and
to restrict the exemption only to those authorities which carry
out any function entrusted to a municipality under Article 243W
of the Constitution has clearly held that: -
“20. What is plain and ambiguous from a bare reading of
a provision under consideration must be interpreted in the
same way as it has been stipulated and not in a way that it
presumes deficiency and radically changes the meaning
and context of the provision. This is the view expressed in
the decision of a five-judge Bench of this Court in
Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd.
[(1961) 2 SCR 189]. The relevant passage therefrom reads
as under :
23… ………… In our opinion, the word “or” employed
in clause 2(s) manifests the legislative intent of
prescribing an alternative. Going by the golden rule
of interpretation that words should be read in their
ordinary, natural, and grammatical meaning, the
word “or” in clause 2(s) clearly appears to us to have
been used to reflect the ordinary and normal sense,
that is to denote an alternative, giving a choice; and,
we cannot assign it a different meaning unless it
leads to vagueness or makes clause 2(s) absolutely
unworkable. We are fortified in our view by the
decision of this Court in Sri Jeyaram Educational
Trust v. A.G. Syed Mohideen [(2010) 2 SCC 513]
Xxxxxxxxx xxxxxxxxx xxxxxxxxxx
33. To make a statute workable by employing
interpretative tools and to venture into a kind of judicial
legislation are two different things. Merely because the
statute does not yield intended or desired results, that
cannot be reason for us to overstep and cross the
Service Tax Appeal No.70219 of 2026
22
Lakshman Rekha by employing tools of interpretation to
interpret a provision keeping in mind its outcome.
Interpretative tools should be employed to make a statute
workable and not to reach to a particular outcome.”
In the light of above submission and the judgement of the
Hon’ble Supreme Court in the case of Commissioner, Central
Excise & Service Tax, Patna vs. M/s Shapoorji Pallonji And
Company Pvt. Ltd. [2023(10)TMI 748 – S.C], the Work Contract
services provided to U.P. Project Corporation against the
contracts awarded prior to 01.03.2015 are exempted services
under Entry No.12A of Notification No.25/2012.
ISSUE -3
st
The benefit of Cum tax Value was already allowed by the 1
Adjudicating Authority in the OIO dated 30.08.2022. While
st
allowing the benefit the 1 Adjudicating Authority has clearly
stated that-
“The appellant have submitted a copy of
certificate issued by U.P. project Corporation,
wherein it is clearly mentioned that no Service
Tax has been paid to the party. Further on
perusal of other documents like Work orders and
payment Certificates etc, it is also noticed that
there is no mention of service Tax. Hence it would
be in the interest of Justice to allow benefit of
Cum tax Value.”
17. The allowance of Cum Tax Value benefit has also been
accepted by Department and no appeal was filed against the
same. Once the issue is settled in favour of Assessee then again,
nd
this issue cannot be agitated by 2 Adjudicating Authority. The
Certificate issued to this effect and other documents are again
Service Tax Appeal No.70219 of 2026
23
attached with the MOA to prove that no service tax was paid to
the Department. The Department has also failed to prove / or
produce any document indicating that we have charged/ received
any service tax from our service Recipient.
18. I find that the learned authorities erred in denying the
benefit of cum-tax value as provided under Section 67(2) of the
Finance Act, 1994. The Appellant had not collected any Service
Tax separately from its clients, and therefore, the gross amount
received must be treated as inclusive of Service Tax. This benefit
was correctly allowed in the first OIO and, not having been
challenged by the Department, had attained finality. The denial
of this settled benefit in the de-novo proceedings is arbitrary,
illegal, and contrary to the law laid down by the Hon’ble
Supreme Court in Commissioner vs. Advantage Media
Consultant [2009 (14) S.T. R. J49 (S.C.)] . Reliance is also
placed on the decisions:-
(i) Balaji Manpower Services Vs. UOI [2019(31)
G.S.T.L. 418 (P&H)]
(ii) ICICI Econet Internet & Technologies Vs.
Commissioner of Central Tax Bangalore [2021
(51) G.S.T.L. 36 (Tri. - Bang.)]
ISSUE -4
19. I find that there was no reference of ITR amount of
st
Rs.5,59,98,614/- in F.Y. 2016-17 either in SCN or in 1
Adjudication Order. Further only a reference of Form 26AS
receipt of Rs.5,41,14,781/- in F.Y. 2016-17 was there. While
st
determining the Tax liability only, the 1 Adjudicating Authority
by mistake held that 26AS receipt in F.Y. 2016-17 is
Rs.4,09,54,398/- and determined the Tax liability on said
amount. The mistake was that he took the receipt from UP
Project Corporation Unit 17 as Rs.2,88,990/-, whereas actually
amount of receipt was Rs.1,44,49,373/- and thereby
Rs.1,41,60,383 /- was not taken into account. While filing appeal
Service Tax Appeal No.70219 of 2026
24
against said discrepancy, without any documentary evidence
arbitrarily alleged that ITR amount in F.Y. 2016-17 is
Rs.5,59,98,614/- on which tax liability was liable to be
determined. While deciding the Departmental / Party’s Appeal
both by a Common Order dated 13.01.2023, the Commissioner
(Appeal) on this issue has clearly held in Para 4.8 of his Order
that:-
“ The appellant has provided before me the copy of ITR -
5 for the F.Y. 2016-17. In the P & L statement, the
Gross receipts from sale of service has been shown as
Rs.5,43,76,184, whereas the adjudicating authority has
taken Rs.4,09,54,398/- for calculating tax liability of
F.Y. 2016-17 and this needs fresh recalculation.”
20. The copy of ITR -5 for F.Y. 2016-17 indicating total
revenue from operations indicating a Receipt of Rs.5,43,76,164/-
was produced before him. But he arbitrarily held :-
“The party themselves have declared the value of
services as declared in ITR of Rs .5,59,98,614/- in their
Income Tax Return. The Form 26 AS capture details
only in respect of receipts which has been subjected to
TDS of income tax. As the party hasn’t provided any
clarification or documentary evidence is support of
exemption in this regard. Hence it has been interpreted
that the aforesaid differential receipt of Rs.8,83,833/- is
liable to Service tax at full rate of 15% without any
abetment.”
21. The Copy of ITR-5 for the F.Y. 2016-17 is placed at page
181 of the MOA which clearly shows that the total gross receipt
is Rs.5,43,76,184/- only. This fact has already been narrated by
the 2st Appellate Authority in his Order. Hence the allegation
that differential of ITR amount and 26AS Amount comes to
nd
Rs.8,83,833/- on which demand has been confirmed in 2 OIO
Service Tax Appeal No.70219 of 2026
25
nd
and upheld in impugned OIA [ 2 OIA] in Para 5.1 of his order
[placed at Page 142 of MOA] is totally in correct as the ITR figure
nd nd
has wrongly been quoted by Department in 2 OIO / 2 OIA.
Hence demand of S.Tax on differential amount of ITR and 26AS
is totally improper & illegal.
ISSUE 5
22. I find that the Appellant is entitled to the benefit of
threshold exemption of Rs.10 Lakhs under Notification
No.33/2012-ST dated 20.06.2012 for the financial year 2016-17.
The eligibility for this exemption is determined based on the tax
able turnover of the preceding financial year. In F.Y. 2015-16,
the Appellant's services were entirely exempt, and thus, the
aggregate value of taxable services was NIL. The authorities
below have failed to grant this statutory exemption without any
valid reason. The Appellant was in a reasonable belief that the
Work Contract Services provided to Indian Railways for Services
by way of construction, erection, commissioning, or installation
of original works are exempt from levy of Service Tax under
Entry No.14 (a) of Notification No.25/2012 (S.T.) dated
20.06.2012. The 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; a structure meant predominantly for use as (i) an
educational, (ii) a clinical, or(iii) an art or cultural establishment;
or a residential complex predominantly meant for self-use or the
use of their employees or other persons specified in the
Explanation-1 to clause (44) of section 65B of the said Act are
exempt from levy of Service Tax under Entry No.12(a) or
12A(a)/ 12 A(b)/ 12 A(c) of Notification No.25/2012 (S.T.) dated
20.06.2012 as amended. The services provided to the
Government (Agriculture Extension) for Soil Conservation
Service Tax Appeal No.70219 of 2026
26
(Medhbandi) was also exempt from the levy of Service Tax as
falling under Section 66 D of the Finance Act ’1994.
23. The Government vide Notification No.6/2015-ST dated
01.03.2015 (W.e.f. 01.04.2015) omitted the said clause 12(a)
but again vide Notification No.9/2016-ST dated 01.03.2016
reinserted this exemption vide entry No.12A with the same
terms & condition with retrospective effect. However, another
condition was also inserted “under a contract which had been
entered into prior to the 1st March 2015 and Section 102 was
also inserted. This act of withdrawal of the exemption byway of
deleting clause 12 (a), vide Notification No.6/2015 dated
01.03.2015 and again reinstating the same vide Notification
No.9/2016-ST dated 01.03.2016 vide new entry No.12 A with
certain condition gave the impression not only to the Noticee but
to many/ almost all such service providers that said exemption is
still available or reverted back to its original position. This is the
reason that the Noticee neither took registration, nor claimed
any Service Tax from their service recipient nor paid to the Govt.
Exchequer. Further, the service recipients also never paid us any
S.Tax amount on the Taxable Value of the Bill as raised to them.
24. I find that the SCN dated 13.10.2021, pertaining to the
period April 2016 to June 2017, was issued without any
positive, tangible, or affirmative evidence to substantiate
allegations of fraud, collusion, wilful misstatement, or
suppression of facts with an intent to evade payment of service
tax. The Adjudicating Authority has failed to appreciate that the
burden to prove wilful intent to evade tax lies heavily upon the
Department, which has not been discharged in the present case.
The Show Cause Notice merely makes bald and mechanical
allegations, reproducing statutory language, without pointing to
any specific act of wilful suppression by the Appellant. The
Hon’ble Supreme Court /other Courts have held that in case of
genuine interpretational disputes, where the assessee acts in
good faith based on a plausible legal view, do not attract the
extended limitation period. The Department must prove that
Service Tax Appeal No.70219 of 2026
27
suppression, fraud, or willful misstatement was involved, which
is absent in bona fide legal disagreements.
25. The extended period can only be invoked if there is clear
evidence of suppression of facts, fraud, or willful misstatement
with an intent to evade duty. I find that it is a settled principle of
law, as held by the Hon’ble Supreme Court in cases like CCE Vs.
Chemphar Drugs & Liniments [1989 (40) E.L.T. 276 (S.C.)]
and Pushpam Pharmaceuticals Company Vs. CCE, Bombay
[1995 (78) E.L.T. 401 (S.C.)], that the expression ‘suppression
of facts’ must be construed strictly and requires a deliberate and
wilful act to evade tax, not mere omission or non-payment. The
Tribunal in the case of Hospitech Management Consultants
Pvt. Ltd. Vs. CCE, New Delhi [2023 (385) E.L.T. 575 (Tri.-
Del)] has held that Extended period of limitation for raising
demand under proviso to Section 73(1) of Finance Act, 1994
could not be invoked if alleged suppression of facts was not
willful with an intent to evade payment of Service Tax.
26. I find that the imposition of penalty under Section78 of the
Finance Act, 1994, is wholly unwarranted. The extended period
of limitation and the penalty under Section 78 can be invoked
only in cases of fraud, collusion, willful misstatement, or
suppression of facts with an intent to evade tax. The present
case is one of bona fide belief regarding the non-taxability of
services, especially given the legislative confusion surrounding
the exemption under Entry 12/12A. The Appellant had declared
all its receipts in its financial statements and ITRs. It is a settled
law that when the issue involves the interpretation of statutory
provisions, the extended period of limitation and penalty for
suppression cannot be invoked. Reliance is placed on the
judgment of the Hon'ble Supreme Court in Continental
Foundation Joint Venture Holding vs. CCE Chandigarh-I
[2007 (216) E.L.T. 177 (SC )] . I find that the imposition of late
fees of Rs.6,000/- under Section 70 of the Finance Act, 1994,
readwith Rule 7C of the Service Tax Rules, 1994, is illegal. Rule
7C prescribes a penalty for delay in filing returns, not for non-
Service Tax Appeal No.70219 of 2026
28
filing of returns. Since the Appellant, under a bona fide belief of
non-liability, had not filed any ST-3 returns, the said provision is
inapplicable, as held in Jossy Edwin Pinto Vs. CCE, Mangalore
[2019(27) G.S.T.L. 575 (Tri. -Bang.)] . The penalties under
Section 77 are also not imposable given the bona fide belief of
the Appellant.
27. I find that the entire proceedings are void ab initio as the
SCN No. VI(ST) Dem (12) Adj -20/2021 dated 13.10.2021 was
issued in gross violation of the mandatory pre-show cause notice
consultation mechanism prescribed by the Central Board of
Indirect Taxes and Customs (CBIC). The demand proposed in the
SCN was Rs.1,07,86,840/-, which is well above the threshold of
Rs.50 Lakhs, mandating such consultation as per Board’s
instructions F.No.1080/09/DLA/MISC/15 dated 21.12.2015,
Master Circular No.1053/02/2017-CX dated 10.03.2017, and
Circular No.1076/02/2020-CX dated 19.11.2020. These circulars
are binding on the Department, and failure to adhere to this
mandatory procedural requirement vitiates the SCN and all
subsequent proceedings, rendering them null and void. Reliance
is placed on the judgments in:-
(i) Amadeus India Pvt. Ltd . vs. Union of India
[2019 (25) G.S.T.L. 486(Del.)].
(ii) Rochem Separation Systems India Pvt.
Ltd . vs. Union of India Bombay High Court
[2025] 170 VST 10 (Bom) / W.P. No. 822 of
2021 (Decided Sep 2025).
(iii) Dharamshil Agencies vs. Union of India High
Court of Gujrat (2021 (55) G.S.T.L.516 (Guj.)
(iv) Back Office IT Solutions Pvt. Ltd . vs.
Union of India [2021(50) G.S.T.L. 522(Del.)] .
(v) Ravray Constructions Vs Addl. Commr
Vadodara-I, [2025(6)TMI 16- Gujrat High
Court].
Service Tax Appeal No.70219 of 2026
29
28. The Ld Commissioner (Appeals) has rejected the plea of
the Appellant on frivolous ground stating that Pre-SCN
consultation is not necessary in the facts and circumstances of
this case and Board has excluded such consultation in case of
fraud and collusion cases. The absence of pre-SCN consultation
in cases involving demands exceeding Rs.50 lakhs, unless the
SCN is preventive or offence-related, is fatal to the validity of the
proceedings. The exception to mandatory pre-consultation is
case specific and not formation specific; mere suspicion or
possibility of offence does not exempt the Department from
following the procedure.
29. It is pertinent to mention that the Appellant has already
deposited a pre-deposit of Rs.4,87,410/- by following 3 E
receipts, but as the time of filing of ST-5 due to mistake only 2 E
receipts were taken into record:-
1 E-Receipt dated 30.09.2024 for Rs.1,00,550/- (placed at
page 198 of MOA)
2 E-Receipt dated 14.10.2022 for Rs.3,43,710/- (placed at
page 199 of MOA)
3 E-Receipt dated 18.04.2026 for Rs.43,450/- (placed at
page 200 of MOA)
30. Hence, all the E-Receipts may be taken into account as
pre-deposit and the amount of demand confirmed be
appropriated from the same and balance excess amount
refunded to the Appellant.
31. In view of the above discussions, the impugned order is
set aside. The appeal filed by the Appellant is allowed with
consequential relief, as per law.
(Order pronounced in open court on - 22.10.2026 )
Sd/-
(P. K. CHOUDHARY)
MEMBER (JUDICIAL)
LKS