2026-VIL-1745-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exemption under Notification No.25/2012-ST to works contract services provided to local authority or governmental authority - Appellant executed composite turnkey works contracts for construction of water treatment and effluent treatment plants for a Public Health Engineering Department and Municipal Corporations and discharged service tax under the Works Contract (Composition Scheme) Rules, 2007, but continued to pay at the old composition rate after it was increased - Demands raised for three different periods were confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals), who ignored the plea of exemption under Sl. Nos. 12 and 13 of Notification No.25/2012-ST dated 20.06.2012 - Whether the Appellant is eligible for exemption in terms of Notification No.25/2012-ST - HELD - The Notification specifies that services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation or completion of a civil structure meant predominantly for use other than commerce, and of a pollution control or sewage treatment plant, are exempt from service tax. It is not the case of the Revenue that the Appellant's claim is incorrect, nor has the Revenue denied that the Appellant executed the works contracts for construction of water and effluent treatment plants for local authorities and governmental authorities. The replies to the Show Cause Notices and the Statement of Demand categorically stated that the Appellant was engaged in composite turnkey works contracts for such bodies, and these facts were never denied by the Department. The Commissioner (Appeals) very conveniently ignored this plea. The reference of a similar issue to the Larger Bench in another case need not be gone into, as the Appellant there had not undertaken works contracts for civic bodies. By virtue of the Mega Exemption Notification, the service tax liability on works contracts executed for local bodies and governmental authorities becomes exempt - The demands upheld in the impugned Order-in-Appeal cannot sustain and the appeals are allowed
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