AECS Engineering and Geotechnical Services Pvt. Ltd. Vs Principal Commissioner of Central Goods & Services Tax (CESTAT Allahabad)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, has set aside a significant service tax demand against AECS Engineering and Geotechnical Services Pvt. Ltd., ruling that a sub-contractor providing services for an exempt works contract is also exempt from service tax. The decision, pronounced on May 21, 2025, underscores the principle that service tax liability cannot be solely based on Income Tax Form 26AS data and highlights crucial aspects of works contract taxation and Cenvat credit.
AECS Engineering and Geotechnical Services Pvt. Ltd. had filed an appeal against an Order-in-Original dated March 29, 2022, issued by the Principal Commissioner, CGST Noida. The dispute originated from information received by the Service Tax Department from the Income Tax Department, specifically regarding discrepancies between the value of services declared by the appellant in their ST-3 Returns and the figures reflected in their Form 26AS for Financial Years 2015-16 and 2016-17.
According to the department, AECS Engineering had provided services valued at Rs. 10.24 Crores and Rs. 17.01 Crores in FY 2015-16 and FY 2016-17, respectively. A scrutiny of ST-3 returns revealed that these returns were not filed for the period from October 2015 to March 2017, and there was a substantial difference between the Form 26AS values and the ST-3 returns (Rs. 7.35 Crores for FY 2015-16 and Rs. 17.01 Crores for FY 2016-17). This led to a show cause notice dated March 26, 2021, demanding service tax amounting to Rs. 3.61 Crores, along with interest and equivalent penalty under Section 73(1) and Section 77 of the Finance Act, 1994.
