The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed the demand order confirming that services like construction of roads, and bridges rendered to the Government can be exempted from Tax.
Koleshwari Infracons Private Limited (appellant) was alleged to have provided taxable construction service and refrained from paying appropriate service tax. The Department issued a notice demanding a service tax of Rs. 3,00,77,354 to the appellant.
The Commissioner confirmed the demand of service tax along with interest and penalty. Aggrieved by the order of the commissioner, an appeal was filed before CESTAT.
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The counsel for the appellant submitted that the appellant did not receive notice before the personal hearing. The counsel also submitted that the appellant provided services for the construction of roads, bridges, etc to the government. The counsel also stated that the services rendered to the government were exempted from the levy of service tax.
The counsel for the appellant also argued that the superintendent of CGST verified records and reported that the services rendered are exempted from service tax and submitted a closure report to the Divisional Assistant Commissioner.
Therefore, the counsel for the appellant submitted the closure report brought to the notice of the Commissioner but it was rejected by him and the demand of service tax was confirmed by him. So, the counsel prayed to set aside the demand order.
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On the other hand, the counsel for the department relied on the order of the commissioner and sought to dismiss the appeal.
The two-member bench comprising R. Muralidhar ( Judicial Member ) and K. Anpazhakan ( Technical Member ) observed that the appellant rendered services like construction of roads, bridges, etc which was evident from the payments made under section 194C of the Income Tax Act, 1961.
The tribunal also observed that the commissioner cannot reject a report submitted by the department without any valid reason. Therefore, the tribunal quashed the demand order.
The tribunal also remanded back to the commissioner for examination of the claim made by the appellant and directed to give proper opportunity to the appellant. Thus the appeal was allowed.
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