The Delhi High Court in a recent decision quashed the demand of Rupees 2 crores on executed work contracts and observed that New Okhla Industrial Development Authority (NOIDA) is body corporate under Uttar Pradesh Industrial Area Development Act, 1976.
The petitioner, BL Goel and Co, has filed the present petition impugning a show cause notice calling upon the petitioner to show cause, within a period of thirty days as to why the service tax amounting to ₹2,67,26,113/- should not be demanded and recovered from the petitioner by invoking the extended period of limitation under Section 73 of the Finance Act, 1994.
The petitioner is engaged in the business of construction of residential complexes, schools, government buildings, parking facilities etc. on works contract basis. Undisputedly, the said activities fall within the definition of ‘works contract’ under Section 65B (54) of the Finance Act.
It is the petitioner’s case that in terms of Section 129 of the Finance Act, 2019, no proceedings can be initiated in respect of service tax for the period 2014-15 to 2017-18 and no further demands can be raised. The petitioner claims that the impugned show cause notice is, thus, liable to be set aside.
The impugned show cause notice is also premised on the basis that the petitioner had provided works contract services to NOIDA and the petitioner’s liability was determined on an erroneous assumption that the NOIDA was a body corporate. According to the Revenue, NOIDA is not a body corporate and therefore, the petitioner would have to bear the full liability for the works contract services and not just 50% of the said liability.
A Division Bench comprising Justices Amit Mahajan and Vibhu Bakhru observed that “ Section 3(2) of the Uttar Pradesh Industrial Area Development Act, 1976 referring to ‘NOIDA’ expressly states that “The Authority shall be a body corporate.” Thus, NOIDA has been constituted as a body corporate under the said statute. In view of the express provisions of Section 3 of the Uttar Pradesh Industrial Area Development Act, 1976, the premise that NOIDA is not a body corporate is fundamentally flawed.”
“ NOIDA does not require to be registered under any Act as a body corporate, as it has been constituted by the Uttar Pradesh Industrial Area Development Act, 1976 as a body corporate. Thus, clearly the Revenue has misunderstood the response received from NOIDA as is reflected in the impugned show cause notice.”
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