Innovative Pest & Agrotech Pvt. Ltd. Vs Commissioner (CESTAT Allahabad)
Summary: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, considered an appeal by Innovative Pest & Agrotech Pvt. Ltd. against the Commissioner (Appeals), Lucknow order dated 19 June 2025. The dispute concerned a service tax demand for FY 2016-17 based on third-party information received from the Income Tax Department. The original authority had confirmed the demand and imposed penalties, while the Commissioner (Appeals) reduced the tax liability from Rs.6,92,361 to Rs.6,04,862 and appropriated Rs.77,332 already deposited.
The appellant stated that it supplied pest control services at highway and infrastructure construction sites. It argued that these activities formed part of exempt road-construction works and were covered by clause 29(h), read with clause 13(a), of Notification No.25/2012-ST. The appellant identified five contractors and payments totalling Rs.32,79,118. These were submissions of the appellant; the Tribunal did not finally determine the claimed exemption.
On limitation, the appellant pointed to an earlier show cause notice dated 10 December 2020 for a preceding period and argued that the Department already knew of its activities. It also asserted that the disputed notice dated 28 September 2021 had not been served. The Revenue supported the appellate order and sought dismissal of the appeal.
The Tribunal found no allegation of suppression of facts, collusion or wilful misstatement with intent to evade service tax. It also recorded the absence of evidence that the notice had been served or dispatched. In these circumstances, the extended period under the proviso to Section 73 of the Finance Act, 1994 could not be invoked. The Tribunal additionally observed that potential CENVAT credit made the situation revenue-neutral.
The Tribunal consequently held the show cause notice time-barred and declined to sustain the demand. It nevertheless clarified that the amount already paid and appropriated under the Commissioner (Appeals) order could not be claimed as a refund. The appeal was disposed of on these terms.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
The present appeal has been filed by the Appellant assailing the Order-In-Appeal No. LKO-EXCUS-000-APP-198-25- 26, dated -19.06.2025 passed by Commissioner (Appeals) CGST & Central Excise, Lucknow.
2. The facts of the case in brief are that on the basis of third party information provided by the Income Tax Department for the Financial Year 2016-17, a Show Cause Notice1 dated 28.09.2021 was issued on the premises that Service Tax is leviable on the services provided by the party as per the provision of Section 66 of the Finance Act, 1994 and Section 66B of the Finance Act, 2012 read with Section 142 & 174 of the Goods and Service Tax Act, 2017.
3. The Appellant is engaged mainly in providing ‘Pest Control Services’ specially in highway operation and is registered with the Service Tax Department. Vide the Order-In-Original dated 30.03.2024, the demand as proposed in the SCN has been confirmed. Penalty of equal amount has been imposed under Section 78 and penalty of Rs.10,000/- each has been imposed under Section 77(1)(C)(i)(ii)(iii)and under Section 77(2) of the Finance Act, 1994.
4. Being aggrieved, the Appellant-Assessee filed appeal before the First Appellate Authority and the learned Commissioner (Appeals) vide the impugned Order-In-Appeal modified the Service Tax liability of Rs.6,92,361/- to Rs.6,04,862/- An amount of Rs.77,332/- as deposited by the Assessee, has been appropriated.
5. Being still aggrieved, the Assessee has preferred the present appeal before the Tribunal.
6. The learned Advocate appearing on behalf of the Appellant submitted that the services provided by the Appellant-Assessee are ‘Pest Control Services’ provided at construction sites of various infrastructure projects including highways and are exempt under Clause 29(h) of the Notification No.25/2012 dated 26.06.2012.
7. The learned Advocate further submits that copy of the work orders were submitted before the First Appellate Authority. He also submitted that as per safety manual for Construction Workers, Pest control at road construction site is essential to protect worker’s health, prevent the spread of diseases, maintain productivity, and ensure compliance with welfare standards by eliminating breeding grounds, managing waste, and conducting regular inspections. Effective measures include preventing water accumulation, practicing good waste management, and implementing regular thermal fogging and professional pest inspections to control infestations.
8. He submitted that pest control at road construction site is part and parcel of the road construction project and the same has been sub-contracted to the Appellant by the below mentioned clients:-
| SI. No. | Name of the Company | Amount Received |
|---|---|---|
| 1 | M/s GMR Airports Infrastructure Ltd. | 78,967/- |
| 2 | M/s Afcons infrastructure Ltd. | 12,36,921/- |
| 3 | M/s Gulermak TPL Joint Venture | 12,55,730/- |
| 4 | M/s Hindustan Construction Company Ltd. | 2,87,500/- |
| 5 | M/s Isolux Corsan India C&C JV | 4,20,000/- |
| TOTAL | Rs. 32,79,118/- | |
9. He submitted that these clients who are the main contractor for the road construction (Work Contract Service) are exempt from the payment of Service Tax under Clause 13(a) of Notification No.25/2012-ST dated 26.06.2012.
10. Further, clause 29(h) of the aforesaid mega exemption notification exempts sub-contractors providing services by way of works contract to another contractor providing works contract services which are exempt.
11. The learned Advocate also submits that the SCN is barred by limitation of time as for the earlier period SCN dated 10.12.2020 was issued and the same has been adjudicated. However, appeal against the adjudication order is pending before the First Appellate Authority.
12. He further submitted that the Appellant-Assessee is a private limited company and accordingly maintains statutory books of accounts, legers, registers etc which are subject to statutory audit and the statutory returns are filed with the Income Tax Department, Ministry of Corporate Affairs and the same are readily available at the respective portals.
13. He further submitted that since the entire activity of the Appellant-Assessee was in the knowledge of the Department and already a SCN for the preceding Financial Year was issued, there cannot be an allegation of suppression of facts in the given facts and circumstances of the case.
14. He vehemently argued that the SCN for the Financial Year 2016-17 should at best be issued upto 31.10.2019 whereas the impugned SCN has been issued on 28.09.2021 and the same was never received by the Appellant-Assessee, and came to know about the same only when a notice for personal hearing before the Adjudicating Authority was received.
15. Learned Departmental Representative appearing on behalf of the Revenue reiterated the findings recorded in the impugned order and prayed that the appeal filed by the Appellant- Assessee, being devoid of any merits, may be dismissed.
16. I find that it is a fact that there is no allegation of suppression of facts, collusion and willful misstatement with an intent to evade payment of tax. Since the issue was in the knowledge of the Department, the Demand vide the impugned SCN cannot be allowed to be extended beyond the period of one year as being permissible period of limitation, or at best a period of 30 Months.
17. Further, whatever Service Tax was to be paid, the same could have been availed by the Appellant as CENVAT Credit and as such it would be a Revenue neutral situation resulting into no loss of revenue to the exchequer.
18. In view of the above, I am unable to uphold the demand considering the ground of limitation raised by the Appellant. I observe that period of dispute is Financial Year 2016-17 and the SCN was issued only on 28.09.2021 and there is no evidence of service of the same on the Appellant-Assessee and I also observe that the Department could not have produced any documents of it being dispatched to the Assessee.
19. Further, the impugned SCN being a subsequent SCN, the same cannot propose the demand for the period beyond 01 year of the period in dispute nor can raise the allegation as that of suppression of facts or misstatement on the part of the Appellant-Assessee that too with an intent to evade payment of tax.
20. In these circumstances the proviso to Section 73 of the Finance Act extending the period of limitation from 01 year to 5 year could not have been invoked by the Department.
21. In view of these findings, I am of the opinion that the impugned SCN is barred by limitation of time. However, it would not be out of place to mention that whatever was paid by the Appellant-Assessee and appropriated by the Commissioner (Appeals) in the impugned Order-In-Appeal, the same could not be claimed as refund by the Appellant-Assessee.
22. The Appeal filed by the Appellant is disposed of in above terms.
(Dictated and pronounced in open court)
Notes:
1 SCN
