SASHREEK CONSTRUCTORS PRIVATE LIMITED v. THE UNION OF INDIA AND ANR

ORDER Heard Mr. A. Jain, learned counsel for the petitioner and Mr. S.C. Keyal, learned standing counsel for the CGST & Central Excise Commissionerate, appearing for all the respondents.

#2. By filing this writ petition under Article 226 of the Constitution of India, the petitioner has assailed the validity of the demand -cum- show- cause notice dated 23.04.2021 as well as the order-in-original dated

14.03.2022, passed by the Principal Commissioner, CGST & Central Excise, Guwahati (respondent no.2). By the impugned order-in-original dated

14.03.2022, the respondent no. 2 had (i) confirmed the service tax demand of Rs.2,17,50,747/- under Section 73(2) of the Finance Act, 1994, (ii) interest under section 75 of the Finance Act, 1994, (iii) penalty of Rs.10,000/- under section 77(1) of the Finance Act, 1994, (iv) penalty of Rs.10,000/- under Section 77(2) of the Finance Act, 1994, and (v) penalty of Rs.2,17,50,747/- under section 78 of the Finance Act, 1994.

#3. The learned counsel for the respondents had raised preliminary issue on the point of maintainability by submitting that alternative and efficacious remedy is available to the petitioner by filing an appeal before the Page No.# 3/12 appellate authority. It was submitted that the departmental authorities had issued a demand-cum- show cause notice dated 23.04.2021 to the petitioner, wherein the respondent had provided all necessary particulars including the data shared by the CBDT. It was also mentioned that the petitioner had not filed ST-3 return for the financial year 2015-16 and had not paid service tax on the receipts against taxable service. The said notice also contained (i) computation of service tax liability, (ii) details of contravention of provisions of the Finance Act, 1994 and rules framed thereunder, (iii) invoking of extended period of limitation, and (iv) penal provisions, and (v) break-up of nature of demand. However, the petitioner had provided only a three page reply dated 17.02.2022, wherein a mention was made of a work order dated 05.10.2015 purportedly for construction of bailey bridges in the State of Mizoram and it was stated that the services during financial year 2015-16 were covered under Mega Exemption notification no. 25/2012 dated 20.06.2012 of Service Tax.

#4. It was submitted that in this writ petition, the petitioner has suppressed material facts that he was served with notice dated 08.09.2020 and reminder dated 16.09.2020 to furnish certain documents, but the petitioner had failed to submit the same, which has been mentioned in the said demand –cum- show cause notice. It was submitted that the contract work otherwise carries an incidence of service tax and therefore, if any service fell in the exempted category, the assessee had to disclose those relevant facts and then claim exemption from service tax liability. Thus, it is submitted that the petitioner has not been able to make out a case that the demand- cum- show-cause notice dated 23.04.2021 or the impugned order-in-original dated 14.03.2022 was vitiated by any reason whatsoever. In support of his submissions, the learned standing counsel for the respondents has placed reliance on the case of Magadh Sugar & Energy Ltd. v. State of Bihar & Ors., (2021) 0 Supreme(SC) 517 (para- 19): 2021 SCC OnLine SC 801. Page No.# 4/12

#5. Per contra, the learned counsel for the petitioner, while opposing the preliminary issue of maintainability, has submitted that in this case, the petitioner had provided construction service to Engineering Projects (India) Ltd. for construction of 5 (five) numbers of bailey bridge, which were exempted from service tax liability. In this regard, it was submitted that the said contention was negated on the ground that supporting documents such as bills, bank statement or any other document to substantiate the same was not provided.

#6. However, in this regard, the learned counsel for the petitioner had produced a copy of the letter no. 11013/37/2011-BM.III dated 08.07.2015, issued by the Under Secretary to the Govt. of India, Ministry of Home Affairs, Department of Border Management, New Delhi, wherein it was clarified that 10 (ten) bailey bridges constructed along IBB Mizoram were not liable for service tax.

#7. It was submitted that against the bills issued by the petitioner, the authorities of the Engineering Projects (India) Ltd. had deducted income tax at source while releasing payment, which is reflected in Form 26AS. It was submitted that the contract works for construction of bailey bridges qualify as “works contract” and that on such works contract, the incidence of service tax is exempted vide Mega Exemption notification no. 25/2012-ST dated 20.06.2012. It was accordingly, submitted that the petitioner had not taken service tax registration and also did not pay service tax on the payment received for service portion. It was submitted that in respect of the goods component, the Page No.# 5/12 concerned authorities have deducted VAT, as applicable. It was also submitted that existence of alternative remedy is always not a ground for the writ Court to relegate the parties to avail such remedy. In support of his submissions, the following cases have been relied upon, viz., (i) Godrej Sara Lee Ltd. v. Excise and Taxation Officer- cum- Assessing Authority & Ors., 2023 SCC OnLine 95, (ii) Magadh Sugar (supra), (iii) Assistant Commissioner of State Tax v. Commercial Steel Ltd., 2021 (52) GSTL 385 (SC), (iv) M.P. State Agro Industries Development Corpn. Ltd. & Anr. v. Jahan Khan, (2007) 10 SCC 88, (v) J.M. Baxi & Co. v. Commissioner of Customs, New Kandla & Anr., (2001) 9 SCC 275, (vi) State of Tripura v. Manoranjan Chakraborty & Ors., (2001) 10 SCC 740, (vii) M/s. N.E. Logistics & Anr. v. Union of India & Ors., W.P.(C) 1870/2022, decided on 23.03.2022, (viii) Anup Trade and Transport Pvt. Ltd. v. Union of India & Anr., W.P.(C) 3106/2022, decided on 14.02.2023, (ix) G.B. Chowdhury Holdings Pvt. Ltd. v. Union of India & Anr., W.P.(C) 2382/2022, decided on 04.04.2022.

#8. In this case, admittedly, the petitioner had not registered himself under the Central Goods and Service Tax Act, 2017. The petitioner claims that his receipts were from Engineering Projects (India) Ltd., in respect of construction works undertaken for construction of 10 nos. of bailey bridges and the petitioner claims that the service component of those receipts do not fall into the taxable category service.

#9. Admittedly, the petitioner had not filed his service tax return and also did not disclose his gross contractual dues receipt or disclosed service tax component which is exempt from the incidence of service tax.

#10. The learned standing counsel for the respondents has demonstrated that on receipt of notices dated 08.09.2020 and reminder dated Page No.# 6/12

16.09.2020, referred to in the “demand-cum-show cause notice” dated

23.04.2021, the petitioner had not submitted any reply and did not produce any relevant documents.

#11. The learned standing counsel for the respondents has also shown that after receipt of demand- cum- show-cause notice dated 23.04.2021, the petitioner had only produced the following, viz., (1) adjournment of hearing, (2) written submission, (3) MCA Master data and PAN of Director, (4) 26AS, (5) Work order, (6) notification no. 25/2012-ST dated 20.06.2012, (7) Profit and loss account and balance sheet, (8) authorization, (9) memorandum of appearance, (10) photo ID of CMA Arun Kumar.

#12. The learned counsel for the petitioner contends that all the payments received by him are from Engineering Projects (India) Ltd., in respect of construction works undertaken for construction of 10 nos. of bailey bridges and that such receipts are covered by Mega Exemption notification no. 25/2012- ST dated 20.06.2012. If the said contention is true, then perhaps the petitioner can make out a case that the State cannot enrich itself by claiming service tax on service component of contractual receipts, which are otherwise exempt from the incidence of service tax.

#13. Unfortunately, the materials available in this writ petition is insufficient for the Court to prima facie satisfy itself that the petitioner had produced the proof before the respondent no. 2 that all receipts for which TDS is shown to have been deducted as per Form 26AS was against contractual dues received from Engineering Projects (India) Ltd., in respect of construction works undertaken for construction of 10 nos. of bailey bridges and that service component is exempt from incidence of service tax. Page No.# 7/12

#14. It would be relevant to refer to the decision of the Supreme Court of India in the case of The State of Maharashtra & Ors. v. Greatship (India) Ltd., AIR 2022 SC 4408: (2022) 0 Supreme(SC) 948, wherein it has been observed and held as under:-

#6. We have heard the learned counsel for the respective parties at length. At the outset, it is required to be noted that against the assessment order passed by the Assessing Officer under the provisions of the MVAT Act and CST Act, the assessee straightway preferred writ petition under Article 226 of the Constitution of India. It is not in dispute that the statutes provide for the right of appeal against the assessment order passed by the Assessing Officer and against the order passed by the first appellate authority, an appeal/revision before the Tribunal. In that view of the matter, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act. At this stage, the decision of this Court in the case of United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 in which this Court had an occasion to consider the entertain ability of a writ petition under Article 226 of the Constitution of India by by-passing the statutory remedies, is required to be referred to. After considering the earlier decisions of this Court, in paragraphs 49 to 52, it was observed and held as under: