2025-VIL-470-PAT-ST
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SERVICE TAX High Court Cases

Service Tax - Exemption, Government Authority, Extended Period of Limitation – Petitioner was engaged in the construction of bridges and roads in the State of Bihar – Demand of service tax on the 'centage' and other charges collected from the contractors along with penalty and interest - Whether BRPNNL is a "Government", "Local Authority" or "Governmental Authority" within the meaning of the Finance Act, 1994 and Mega Exemption Notification and thus entitled to exemption from payment of service tax – HELD – The petitioner being a company incorporated under the Companies Act, 1956, does not fall within the definition of "Government", "Local Authority" or "Governmental Authority" as per the provisions of the Finance Act, 1994 and the Mega Exemption Notification. The petitioner was not established by an Act of Parliament or State Legislature and the condition of 90% or more participation by way of equity or control by the Government to carry out functions entrusted to a Municipality under Article 243W of the Constitution was also not fulfilled – Further, unless the petitioner is able to demonstrate by cogent evidence that it is engaged in providing services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a road or bridge for use by the general public, it would not be possible to hold that its activity would be exempted under clause 13(a) of the Mega Exemption Notification - the ‘centage’, which is received for service charge/technical assistance or for any other purpose by the petitioner does not fall under the Mega Exemption Notification, as amended and also under the negative list under Section 66D. Moreover, the Circular No.192/02/2016-Service Tax dated 13.04.2016 states that even the government/local authority is liable to pay service tax, if they received fee, consideration for performing such activities – The petitioner cannot claim exemption from payment of service tax under the Mega Exemption Notification – The petitioner is liable to pay the service tax, interest and penalty as determined by the respondent authorities in the impugned order. However, the petitioner is granted the opportunity to prefer a statutory appeal under Section 86 of the Finance Act, 1994, if so advised - The writ application is disposed of - Whether the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 was rightly invoked by the respondent authorities – HELD - The High Court upheld the invocation of the extended period of limitation by the respondent authorities. The Court noted that BRPNNL had not assessed its service tax liability and did not deposit the same on the relevant dates. The matter came to the knowledge of the department only when an investigation was initiated based on third-party data. The Court found that BRPNNL had willfully suppressed the facts of its taxable value from the department with an intention to evade the payment of service tax, by not filing the statutory ST-3 returns during the relevant period. Therefore, the extended period of limitation under the proviso to Section 73(1) was rightly invoked.
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