State-controlled civil-supplies corporations qualify for service-tax exemption on construction of post-harvest storage godowns.

The Tamil Nadu Civil Supplies Corporation (TNCSC), a State-established company with more than 99% Government equity, engaged private contractors to construct scientific storage godowns (SS Godowns), primarily for storing paddy procured from farmers for the Public Distribution System (PDS).

The Department demanded service tax on the construction services for October 2015 to June 2017.

The Commissioner confirmed the demand and imposed interest and penalties by Order in Original dated 19 February 2019.

The High Court’s single Judge quashed that order, and the Department appealed.

For an earlier period, the Commissioner (Appeals) had allowed TNCSC’s appeal against a similar demand; the Department’s further appeal against that decision was pending before the CESTAT without an interim stay.

Whether the writ petition could be entertained despite the statutory appellate remedy available against the order in original

Whether the Department was required to follow the Commissioner (Appeals)’ decision on the earlier-period dispute while its challenge to that decision remained pending without a stay

Whether TNCSC qualified for the service-tax exemption under clauses 12A(a) and 14(d) of Notification No. 25/2012-ST for construction of the SS Godowns

Article 226 confers plenary writ jurisdiction; the availability of an alternative remedy is ordinarily a self-imposed restriction, not a bar to jurisdiction.

As stated in Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority, (2025) 11 SCC 808, a writ petition may be entertained in recognised exceptional circumstances, including where the dispute is purely legal and does not involve disputed facts.

Under Union of India v. Kamlakshi Finance Corpn., 1992 Supp (1) SCC 443, judicial discipline requires subordinate revenue authorities to follow appellate orders unless those orders have been stayed.

Clause 12A(a) of Notification No. 25/2012-ST exempts specified construction services provided to a governmental authority for qualifying non-commercial use; clause 2(s) defines a governmental authority to include a body established by Government with at least 90% equity participation or control to carry out a function entrusted to a Municipality under Article 243W of the Constitution.

Clause 14(d) exempts construction of original works pertaining to post-harvest storage infrastructure for agricultural produce.

The Court rejected the alternative-remedy objection because the controversy was capable of resolution on the undisputed facts and purely legal issues, and the litigation had already been pending for several years.

It also held that the earlier Commissioner (Appeals)’ order remained operative: the Department had not obtained a stay from the CESTAT, so the adjudicating authority was bound to follow it.

On exemption, the Court found that TNCSC was established by the State with more than 99% Government participation and that its PDS activities supported poverty alleviation, protection of weaker sections, and social and economic development, bringing it within the relevant municipal functions for clause 12A(a).

It further found that the SS Godowns were constructed primarily for post-harvest storage of paddy; possible or hypothetical later use for other commodities did not defeat clause 14(d).

It upheld the single Judge’s decision quashing Order in Original No. 18/COMMR/ST/2019 dated 19 February 2019 and dismissed the writ appeal without costs.