2026-VIL-1858-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exemption under Notification No. 25/2012-ST for receipts from Government authorities on supply of equipment on rent - Appellant, not registered with the Department, received consideration for construction and repair of roads and drains, which the First Appellate Authority held exempt, but confirmed the demand on receipts for supply of hot mix plant, paver machine and accessories on rent, allowing cum-tax benefit under Section 67(2) - Whether the receipts for supply of equipment on rent are exempt as services for construction or maintenance of roads - HELD - The agreements are in respect of supply of tangible goods against a mutually agreed consideration, and the contention that these receipts also related to provision of services for construction or maintenance of roads is contrary to the agreements. These services do not fall under any clause of the exemption notification - The finding of the First Appellate Authority cannot be faulted and the demand is upheld - Threshold exemption under Notification No. 33/2012-ST on supply of tangible goods service - Appellant claimed the benefit of the threshold exemption for the year in which the demand survived - Whether the benefit of threshold exemption is available - HELD - The Appellant's own submissions showed that the aggregate value of taxable services in the preceding financial year was much more than the prescribed limit, and the benefit of the exemption cannot be extended for the following financial year - The contention is rejected - Extended period of limitation where the service provider was neither registered nor filing returns - Demand was confirmed by invoking the proviso to Section 73(1) of Finance Act, 1994 on receipts identified from Income Tax Department data, and the Appellant contended that it had not suppressed any information and relied on decisions of the Tribunal - Whether the extended period can be invoked - HELD - The Appellant was not registered with the Department and was not filing any returns, and no plausible explanation was given for not registering and complying with the provisions when it provided taxable services of value much exceeding the threshold exemption limit. Intention to evade payment is obvious, as non-registration and non-disclosure resulted in non-payment of Service Tax. The decisions relied on concerned persons who were duly registered with the Department or who showed a bona fide belief that they were not required to pay tax, whereas the Appellant did not plead or conclusively show any bona fide belief. The finding of fact that the Appellant suppressed the relevant facts with intent to evade payment of tax is not disturbed - The extended period was rightly invoked and the demand is sustained - Penalty under Section 78 of Finance Act, 1994 where extended period is invoked - Penalty equal to the Service Tax confirmed was imposed on the Appellant along with the demand - Whether the penalty under Section 78 is sustainable - HELD - As the demand made by invoking the extended period of limitation under the proviso to Section 73(1) cannot be faulted, the penalty under Section 78 follows naturally, as held by the Supreme Court - The penalty is sustained and the appeal is dismissed.
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