Works Contract Service Tax Demand of Rs. 2.30L: CESTAT Orders Fresh Assessment of Abatement and Reverse Charge Benefits [Read Order]

The Kolkata Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) remanded a ₹2.30 lakh service tax demand for Works Contract Service for FY 2014-15 and directed consideration of benefits under Notification No. 30/2012, including reverse charge and abatement eligibility.

Thus, the matter was considered for fresh adjudication with a reasoned order to be passed within three months.

The appeal was filed by the appellant against Order-in-Appeal No. 08/BOL-ST/2022-23 dated 30.08.2022 passed by Commissioner (Appeals), Siliguri Appeals Commissionerate.

The Appellant, M/s. Joydeb Dey, engaged in providing “Works Contract Service”, rendered services worth Rs. 18,63,588/- during FY 2014-15. Based on information from DG (Audit), New Delhi, the Department found that the appellant filed nil returns for April-September 2014 and no returns for the remaining period, suppressing taxable value and evading Service Tax of Rs. 2,30,340/-.

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A Show Cause Notice dated 22.10.2019 proposed recovery of the tax amount along with interest and penalty. The demand was confirmed through the Order-in-Original dated 18.08.2020, which was upheld by the Commissioner (Appeals) vide Order dated 30.08.2022. Aggrieved, the appellant filed the present appeal before the CESTAT.

The Counsel for the Appellant, D. B. Thakur, highlighted a contradiction in the impugned order that challans, invoices, and contracts were filed by the appellant, while stating that the appellant failed to produce documents before the lower authority.

Further, the Counsel also submitted that none of the documents were considered by the Adjudicating Authority and prayed for remand for fresh hearing in light of this contradiction.

On the other hand, the Authorized Representative for the Respondent, K. Kalpana and S. K. Singh, denied any contradiction, clarifying that non-filing of documents before the original adjudicating authority and stated that the Commissioner (Appeals) perused all documents submitted at the appellate stage and found no evidence to differ from the Order-in-Original, thus rightly dismissing the appeal.

The Tribunal consisted of Judicial Member, Dr. Rachna Gupta, heard and reviewed the matter filed by the appellant.

The Tribunal, after considering the submissions made, found no apparent contradiction in the impugned order. While the Commissioner (Appeals) acknowledged the submission of challans, invoices, and contracts, no computation of actual Service Tax liability was made based on these documents.

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The Tribunal stated that the Commissioner merely held that absence of ST-3 Returns precluded consideration of benefits under Notification No. 30/2012 dated 20.06.2012, and upheld the Order-in-Original on this ground alone.

The Tribunal also observed that the submitted documents were sufficient to determine the nature of contract, terms and conditions, and involvement of goods in the service transactions.

Accordingly, the matter was remanded to the Commissioner (Appeals) with directions to examine the documents and determine eligibility for benefits under Notification No. 30/2012 regarding reverse charge mechanism.

Consequently, if the appellant was found liable, abatement eligibility for Works Contract Service must be adjudicated and the demand computed accordingly, after affording reasonable opportunity to the appellant. The Commissioner (Appeals) was directed to pass a fresh order within three months.

Accordingly, the Tribunal allowed the appeal by way of remand. The Order was pronounced in open court.

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