2025-VIL-1959-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Works contract services, Statutory activities, liability of sub-contractor - Appellant was providing taxable services of construction of residential complex, laying of pipelines, construction of electric substations and laying of cables for Noida, HUDA and Ghaziabad Development Authority (GDA) - Whether the services provided by the appellant for laying of pipelines, construction of underground reservoirs and ranney wells for Noida and HUDA are exempt from service tax – HELD - Demand has been confirmed upon the appellant in respect of the services provided to Noida for laying of pipelines under the Ganga Jal Water Scheme construction of underground reservoirs etc. The period of demand is prior and post to 01.07.2012 - The Larger Bench in Lanco Infratech case has held that laying of pipelines/conduits for lift irrigation systems for transmission of water or for sewerage disposal undertaken for Government/Government undertakings is classifiable as Commercial or Industrial Construction Service (CICS) - In terms of the above decision of the Larger Bench, the services provided by the appellant are in nature of Commercial and Industrial construction services as has been held in the impugned order - the services provided to the statutory authorities or Government will not be exempt from payment of service tax, till it can be shown that the services provide are strictly falling within the purview of exemption notification - Whether the services provided by the appellant for construction of electric substations and laying of cables for UPPCL, which is a commercial undertaking of the Uttar Pradesh Government, are exempt from service tax – HELD - The UPPCL is a commercial undertaking engaged in production and distribution of electricity to public at large as well as to commerce and industry, and therefore the services provided by the appellant for construction of electric substations and laying of cables are not exempt from service tax. The Tribunal relied on the decisions of the Supreme Court and High Courts which held that the statutory activities of the government authorities have to be examined activity-wise and services provided for commercial activities are not exempt - Whether the appellant can claim exemption from service tax on the ground that the main contractor has already paid the service tax – HELD - The sub-contractor is liable to pay service tax even if the main contractor has discharged the service tax liability. The Cenvat Credit Rules allow the service recipient (i.e. main contractor) to take credit of the service tax paid at the preceding stage, and therefore there is no question of double taxation. The Tribunal overruled the contrary decisions relied upon by the appellant - Whether the extended period of limitation is correctly invoked in the present case – HELD - The Tribunal upheld the invocation of extended period of limitation under Section 73(1) of the Finance Act, 1994. The appellant had resorted to suppression and mis-declaration of facts with a clear intention to evade payment of service tax, and therefore the extended period is rightly invoked. The Tribunal relied on various decisions which held that a bona fide belief has to be based on reasonable facts and evidence, which was lacking in the present case - Whether the penalties imposed under Sections 77, 78 of the Finance Act, 1994 are justified – HELD - The Tribunal upheld the penalties imposed on the appellant under Sections 77 and 78 of the Finance Act, 1994. The appellant had contravened the various provisions of the Act by not maintaining records, not determining and depositing the service tax by the due date, and not filing appropriate returns. The Tribunal relied on the Supreme Court decision in Gujarat Travancore Agency case which held that the element of mens rea is not required to be proved for imposition of penalties under such provisions.
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