CESTAT Directs Assessee to Submit Work Order Issued to Main Contractor as Activity Undertaken was Similar, Remands Matter [Read Order]

M/s. Poonam Construction & Co. , the appellant challenged the impugned order demanding Service Tax for the period 2015-16 to 2016-17 on the basis of information received from Income Tax Department that appellant has shown a income of Rs. 2,24,01,689/- against the provision of service during the impugned period. Therefore, the Show Cause Notice dated 08.10.2020 was issued to the appellant to demand Service Tax from the appellant.

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The appellant contested the Show CauseNotice but the demand against the appellant was confirmed for Service Tax of Rs. 33,18,402 alongwith interest and penalties under Section 77 & 78 of the Act was also imposed. The said order was challenged before the Commissioner (Appeal) on the ground that the service provided by the appellant is covered under exemption Notification No. 25/2012 ST dated 20th June, 2012 and the service provided to the Government , Local Authority or Government Authorities are exempt.

The appellant provided services of sub contractor by way of works contract to another contractor providing works contract which are exempted. The appellant also submitted that on the basis of Form 26 AS demand cannot be raised against the appellant. But the Commissioner (Appeal) held that the work has been executed by the appellant on the basis of work order awarded by private contractors and confirmed the demand against the appellant.

Counsel appearing on behalf of the appellant submits that certain work orders have been awarded to the appellant for Earth cutting filling, blanketing compaction, construction of minor bridges, drain and other ancillary works in Reach in connection with construction of new BG Rail line, therefore, the activity undertaken by the appellant which relates to construction of railways. In that circumstances, the service provided by the appellant is covered under Notification No 25/2012 ST dated 20th June, 2012 Serial No. 14 which provides that services by way of construction, erection, commissioning or installation of original works pertaining to railways is exempt from payment of Service Tax .

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The services provided by the appellant are exempt from the payment of Service Tax as main contractor who is supplying the service through the appellant is also exempt as per the CBC circular no. 147/16/2011 ST dated 21.10.2011. In those circumstances, it is clear that impugned order deserved no merit and the same is to be set aside.

On the other hand Authorized Representative submitted that the appellant has failed to provide the original work order awarded to the main contractor to whom the appellant had provided the service therefore, it cannot be ascertain that the services provided by the main contractor are exempt from payment of Service Tax or not.

The sole issue is whether the appellant is liable to pay Service Tax against the demand raised on the basis of Form 26AS obtained from the Income Tax Department or not?. On going through the said work orders appellant is engaged in providing the services of work for construction of side drain, catch water drain and painting work. These facts are not in dispute.

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A two member bench of Shri Ashok Jindal, Member (Judicial) And Shri K.Anpazhakan, Member (Technical) observed that as the activity undertaken by the appellant with regard to construction do not clearly showing that it is in regard to railways which can be evident from the work order assigned to the main contractor, therefore, the work order assigned to the main contractor is essential to ascertain the fact that the activity undertaken by the appellant is in regard to railways. Therefore, we direct the appellant to produce the work orders issued to the main contractor to ascertain the true facts.

The Tribunal remanded matter back to the Commissioner (Appeal) to ascertain the said fact on production of work orders issued to the main contractor by the appellant.

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