2026-VIL-1127-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax – Eligibility of exemption to Works Contract Services for construction of roads and drainage provided to Government Departments and local authorities, Demand based solely on Form 26AS statement – The Appellant, engaged in providing works contract services for construction of roads and drainage to various government departments and local bodies, received payments reflected in Form 26AS. A SCN was issued demanding service tax on the gross receipts along with penalties for non-registration, non-filing of returns, and suppression of facts - Whether the works contract services provided for construction of roads and drainage to Government departments and local authorities are exempt from Service Tax under Serial No. 13(a) of Notification No. 25/2012-ST dated 20.06.2012 – HELD - The services provided by the appellant are exempt from the levy of Service Tax under Serial No. 13(a) of Notification No. 25/2012-ST dated 20.06.2012, which covers services provided by way of construction, erection, commissioning, installation, fitting out, repair, maintenance, renovation, or alteration of structures - The demand of service tax has been made on the basis of Form 26AS statement on which TDS has been deducted under Section 194-C of the Income Tax Act. The authorities below confirmed the demand merely on the basis of the gross value of service received for the work orders but failed to substantiate and examine whether such services were taxable or exempt. While the burden of proof lies with the assessee to demonstrate eligibility for exemption through clear and sufficient documentation, the fundamental requirement is that the authorities must first examine and determine whether the services are taxable or exempt before demanding tax. The demand cannot be sustained when the authorities themselves acknowledge that the services in dispute are in relation to construction of roads but proceed to deny the benefit of exemption without proper examination of the applicability of the exemption notification. The SCN and subsequent orders suffer from legal infirmities as they proceed on an incorrect premise - The impugned order and the Order-In-Original are set aside. The demand of service tax including interest and penalties is set aside – The appeal is allowed
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