Krishna Kant Thakur Vs Union of India (Patna High Court)
Summary: The Patna High Court considered the writ petition filed by Krishna Kant Thakur, a contractor engaged in construction work of roads, bridges and related works, concerning services rendered to the Rural Works Department, Road Construction Department and Bihar Rajya Pul Nirman Nigam Limited during financial years 2015-16 and 2016-17.
The petitioner challenged the order dated 14.09.2023 by which the CGST authorities had demanded service tax including cess of Rs. 4,03,53,185/- under Section 73 of the Finance Act, 1994, Section 119 of the Finance Act, 2015 and Section 116 of the Finance Act, 2016, read with Section 174 of the CGST Act, 2017, together with interest and an equal penalty under Section 78 and a further penalty of Rs. 10,000/- under Section 77(1) of the Finance Act, 1994. The petitioner contended that the payments received for the relevant government works were exempt under Entry 12 of Notification No. 25/2012-ST dated 20.06.2012, read with Section 102 of the Finance Act, 1994. The petitioner stated that the relevant agreements and other documents had been furnished to the authorities, including through an email dated 31.05.2021, but were not considered. In an earlier round, the Division Bench had directed the petitioner to avail the appellate remedy under Section 107 of the B.G.S.T. Act because the agreements had not been produced along with the objections, while expressly making no observation on merits.
The Supreme Court, in Civil Appeal No. 5383/2025 arising from SLP (Civil) No. 10965/2025, subsequently set aside that order and remitted the matter to the High Court to provide the petitioner an opportunity to produce the documents. Upon restoration, the petitioner produced the relevant agreements and documents as Annexures P/4A to P/4D. The Department submitted that the documents had not previously been placed before the adjudicating authority and that the authority had therefore recorded that the relevant work contracts had not been submitted.
During the hearing, the Department accepted that, since the copies of the relevant contracts and agreements were now on record, the Commissioner could give the matter fresh consideration on the basis of the complete material. Having regard to this stand, the High Court set aside the impugned order dated 14.09.2023 and remitted the matter to the Commissioner, CGST & Central Excise, Patna Commissionerate, Patna, for fresh consideration and an appropriate order based on the materials on record. The Commissioner was permitted to call for relevant records and documents, which the petitioner would be obliged to provide within the prescribed period, and was directed to provide the petitioner an opportunity of hearing. The Court directed that an appropriate order be passed within three months from receipt or production of a copy of its order. The petitioner undertook to appear before the Commissioner on 17.08.2026 at 11:00 AM, and the writ application was allowed to the extent indicated.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
Heard learned counsel for the petitioner and learned Additional Solicitor General for the Department of CGST&CX.
2. Petitioner in the present writ application is seeking the following reliefs: –
“(i) For issuance of order/direction or a writ of certiorari for quashing and setting aside the order dated 14.09.2023 passed by the respondent Commissioner, C.G.S.T. and CE, Patna (contained in Annexure- P8) whereby and where under he has directed the petitioner to make payment of service tax including cess amounting to Rs. 4,03,53,185/- (Rupees Four Crore, Three Lakhs Fifty-Three Thousand One Hundred Eighty-Five Only) under Section 73 (2) of Finance Act, 1994, Section 119 of the Finance Act, 2015, Section 116 of the Finance Act, 2016 read with Section 174 of C.G.S.T. Act, 2017 along with due interest with a further direction to make payment of equal penalty amounting to 4,03,53,185/- (Four Crore Three Lakh Fifty-Three Thousand One Hundred Eighty-Five Only) with stipulation that if the service tax so determined and interest is paid within 30 days of the receipt of the order then as per second proviso Section 78 of the of Finance Act, the penalty payable will be only 25% of the service tax so determined. The petitioner is also aggrieved by the direction imposing penalty of Rs. 10,000 (Rupees Ten Thousand Only) under Section 77(1) of the Finance Act.
(ii) For issuance of an order/direction or an appropriate writ for staying the operation of the aforesaid order dated 14.09.2023 passed by the Commissioner, C.G.S.T. and C.E., Patna during the pendency of the present writ application with a further direction upon the respondents to not take any coercive steps until adjudication of the present writ application.”
3. The petitioner is a contractor said to be engaged in construction work of roads, bridges etc. The petitioner claims to have completed various works offered by the Rural Works Department, Darbhanga and Madhubani, Road Construction Department, Road Division, Madhubani or Bihar Rajya Pul Nirman Nigam Limited, Works Division, Darbhanga which is also a government company. It is stated that the present writ application pertains to the services rendered to the aforesaid authorities by the petitioner during the financial years 2015-16 and 2016-17.
4. The petitioner was served with a notice on 16.04.2021 from the Respondent Superintendent, CGST & CX Range- Darbhanga, calling upon him to submit within three days from the receipt of the said letter with regard to the difference between the turnover shown in the income tax return viz-a-viz the turnover shown in the service tax return for the financial years 2015-16 and 2016-17. It was alleged that the petitioner had not paid or short paid service tax for the aforesaid period.
5. In response to the said notices dated 16.04.2021 and 21.04.2021 (Annexure ‘P/1 Series’), the petitioner responded by filing a reply dated 21.04.2021 in which he contended that the payments received are exempted under Entry 12 of Notification No. 25/2012-ST read with Section 102 of the Finance Act, 1994. The petitioner was served with a demand-cum-show cause notice alleging that he had evaded payment of service tax including cess tax of Rs.4,03,53,185/- only during the given period. It is the grievance of the petitioner that despite the response of the petitioner through his Chartered Accountant by way of email on 31.05.2021, the respondent authorities did not take note of the same and ignored the four agreements relating to financial year 2015-16 and five agreements relating to financial year 2016-17 which were submitted with the Assistant Commissioner (Adjudication) Goods and Services Tax and Excise, Patna Commissionerate.
6. The details of the letter of the award and work order given to the petitioner have been disclosed in paragraph ’10’ of the writ application. The petitioner claims that he had made available all the required documents as per notice received from the Department.
7. By the impugned order dated 14.09.2023, the petitioner was served with a demand of service tax and an equal amount of penalty.
8. Being aggrieved by the impugned order dated 14.09.2023, the present writ application has been filed.
9. It appears from the records that in the earlier round, when the matter was taken up for consideration, the Hon’ble Division Bench of this Court presided over by the then Hon’ble the Chief Justice passed the following order on 24.10.2024:-
“The petitioner is aggrieved with Annexure-P8, by which he was imposed with the liability to tax under the C.G.S.T Act.
2. The petitioner’s contention is that the entire contracts carried on by him are exempted as per Annexure-P9 Notification bearing No. 25 of 2012- Service Tax dated 20.06.2012. However, the order itself indicates that there was no agreement produced by the petitioner along with the objection. The learned Counsel for the petitioner submits that the agreements were submitted by a separate e-mail.
3. In any event, it is admitted that along with the objections no agreements were submitted, in which circumstance, the Assessing Authority was disabled from considering whether the exemption is available or not. Since the consideration is based on the agreements, we are of the opinion that the petitioner should avail the appellate remedy, as is available under Section 107 of the B.G.S.T Act. If an appeal is filed within one month from today, we direct that the appeal be accepted without reckoning the delay and the same considered on merits.
4. We make it clear that we have not made any observation on merits of the matter.
5. The writ petition stands disposed of with the above directions.”
10. Being aggrieved by and dissatisfied with the order of the Hon’ble Division Bench, the petitioner moved before the Hon’ble Supreme Court in Civil Appeal No. 5383/2025 arising out of Special Leave Petition (Civil) No. 10965/2025. The Hon’ble Supreme Court, having heard the matter, took a view that one opportunity is required to be granted to the appellant to produce the documents before the High Court so as to enable the High Court to look into the same and then take an appropriate decision in accordance with law. The Hon’ble Supreme Court, therefore, set aside the order of the Hon’ble Division Bench and remitted the matter to this Court, whereupon the present writ application was restored and has been listed once again for consideration.
11. In course of hearing of the writ application, the learned counsel for the petitioner has brought to the notice of this Court the supplementary affidavit filed on behalf of the petitioner. It is reiterated that the petitioner had submitted an exhaustive list of documents along with agreement and other papers earlier but those were not considered by this Court, even as the respondent’s counsel had not filed any counter affidavit.
12. In sum and substance, the submission of learned counsel for the petitioner is that the respondent authorities have passed the impugned order by ignoring the documents placed on record and the notification issued by the Government of India, whereunder the services rendered by the petitioner under the agreements in question are exempted from levy of service tax.
13. Attention of this Court has been drawn towards the documents enclosed as Anenxures ‘P/4A’, ‘P/4B’, ‘P/4C’ and ‘P/4D’.
14. Dr. K. N. Singh, learned Additional Solicitor General representing the Department of CGST & CX submits that earlier, the petitioner had not placed those documents which have been now brought on the record before this Court, therefore, the Adjudicating Authority has rightly recorded in paragraph ‘5’ of the impugned order that the noticee had failed to submit the copy of the relevant work contracts/agreements.
15. It is submitted that now that the copies of the relevant work contracts/work agreements have been brought on the record, the Commissioner, CGST & Central Excise, Patna Commissionerate, Patna shall give a fresh consideration to the matter keeping in view the entire materials on the record and shall pass an appropriate order within a reasonable period.
16. Having regard to the kind of stand taken on behalf of the Department of CGST & CX, Patna, we set aside the impugned order dated 14.09.2023 (Annexure ‘P8’ to the writ application. The matter is remitted to the Commissioner, CGST & Central Excise, Patna Commissionerate, Patna for a fresh consideration and passing of an order based on the materials on the record. It will be open to the Commissioner, CGST and Central Excise to call for any relevant records and documents from the petitioner which the petitioner shall be obliged to provide within the prescribed period. The petitioner shall also be given an opportunity of hearing in accordance with law. An appropriate order shall be passed by the Commissioner, CGST & Central Excise, Patna-II Commissionerate, Patna within a period of three months from the date of receipt/production of a copy of this order.
17. Learned counsel for the petitioner undertakes to appear before the Commissioner, CGST & Central Excise, Patna-II Commissionerate, Patna on 17th August, 2026 at 11:00 AM.
18. This writ application is allowed to the extent indicated hereinabove.
