Service Tax Not Applicable as per Work Order, Within Scope of Receiver: CESTAT Allows Appeal by Worker Undertaking Fabrication [Read Order]
CESTAT made note of several case laws and held that the appellant is not liable to pay Service Tax as per the conditions highlighted in the Work Order by the contractor.
![Service Tax Not Applicable as per Work Order, Within Scope of Receiver: CESTAT Allows Appeal by Worker Undertaking Fabrication [Read Order]](https://images.taxscan.in/h-upload/2026/02/20/2126478-service-tax-not-applicable-6jpg.webp "Service Tax Not Applicable as per Work Order, Within Scope of Receiver: CESTAT Allows Appeal by Worker Undertaking Fabrication [Read Order]")
The Customs, Excise and Service Tax Appellate Tribunal, Kolkata Bench, allowed an appeal by a worker who undertook fabrication work. The rationale behind the decision was that the work order did not hold the work liable for service tax. The show cause to the assessee was issued on 23.12.2020 demanding Service Tax of INR 18,92,246/- for the year 2015-16. The Adjudicating...
The Customs, Excise and Service Tax Appellate Tribunal, Kolkata Bench, allowed an appeal by a worker who undertook fabrication work. The rationale behind the decision was that the work order did not hold the work liable for service tax.
The show cause to the assessee was issued on 23.12.2020 demanding Service Tax of INR 18,92,246/- for the year 2015-16. The Adjudicating Authority confirmed the demand. The appellant had filed a copy of the Work Order on 30.03.2015 wherein it was stated that service tax is not applicable on part of the appellant but rather within the scope of the client, V. R. Engineering Works who awarded the work to the assessee-appellant. The Commissioner went through the Work Order and still dismissed the appeal.
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The appellant appealed before CESTAT and submitted that the appellant carried bona fide belief that no Service Tax is payable by them as has been clearly stated in the Work Order. Reliance was placed on Savika Industries v. Commissioner of Central Excise, Chennai (2016) and Shanti Construction Co. v. Commissioner of Central Excise and Service Tax, Rajkot (2024).
The appellant admitted before the Commissioner that they were providing labour supply to the contractor. The tribunal heard both sides carefully and observed that the appellant can entertain a bona fide belief that no Service Tax liability raises on him.
The single bench of R. Muralidhar (Judicial Member) highlighted the conditions of the Work Order and referred to Tabassum Enterprises v. C, CGST & CX (2025). The rationale given in the mentioned case applies to the present case, according to the tribunal. CESTAT finally allowed the appeal and held the appellant eligible for consequential relief, if any, as per law.
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