Case Law Details
Ravindra Nath Singh Vs Commissioner (CESTAT Allahabad)
The appeal challenged Order-in-Appeal No. 02/ST/Appl/Alld/2026 dated 15.01.2026, whereby the Commissioner (Appeals), CGST and Central Excise, Allahabad upheld the confirmation of service tax demand relating to services provided to the Executive Engineer, Irrigation Construction Division, Robertsganj and Executive Engineer, Bundhi Division-II, Robertsganj, Sonbhadra. The appellant sought setting aside of the remaining demand and consequential penalties.
The appellant was registered with the Rural Engineering Services (RES) Department of the Uttar Pradesh Government, a nodal agency for construction work undertaken for Government and Semi-Government bodies. During the Financial Year 2016-17, the appellant received payments from Executive Engineer, Irrigation Construction Division, Robertsganj, Executive Engineer Irrigation, Bundhi Division-II, Rural Engineering Services, Zila Panchayat Varanasi and Zila Panchayat Chandauli. The appellant was registered under the U.P. VAT Act but was not registered with the Service Tax Department, believing that the services rendered were not liable to service tax. Before the adjudicating authority, the appellant produced Exemption Notification No. 25/2012-ST dated 20.06.2012, certificates issued by Rural Engineering Services regarding the contract work, abstracts of agreements and bills of quantity, work orders issued by Zila Panchayat Varanasi and Chandauli, Form 26AS for 2016-17 and 2017-18, and VAT assessment orders for the relevant financial years.
The adjudicating authority accepted the appellant’s claim for exemption in respect of works executed for Rural Engineering Services involving construction of C.C. roads and K.C. drains, supported by certificates and agreements, and also accepted exemption for interlocking road work executed for Zila Panchayat Varanasi and Chandauli. However, it held that no supporting documents such as work orders, agreements, certificates or bills had been produced regarding payments of ₹1,06,670 received from Executive Engineer, Irrigation Construction Division, Robertsganj and ₹1,79,068 received from Executive Engineer, Bundhi Division-II. Consequently, exemption under Mega Exemption Notification No. 25/2012-ST was denied for those receipts. The adjudicating authority confirmed service tax demand of ₹87,861 under Section 73(2) read with Section 73(1) of the Finance Act, 1994, dropped service tax demand of ₹8,80,181, ordered recovery of interest under Section 75, imposed penalty of ₹87,861 under Section 78 and imposed penalty of ₹10,000 under Section 77(1).
The Commissioner (Appeals) dismissed the appellant’s appeal, observing that documentary evidence such as challans, receipts, tax invoices, log books, measurement books, work completion certificates, bank statements, stock registers, sub-contract agreements, VAT registration certificates and VAT returns had not been produced to establish the precise nature of the services or their eligibility under the Mega Exemption Notification.
Before the Tribunal, the dispute was confined to the non-payment of service tax on services rendered to the Executive Engineer, Irrigation Construction Division, Robertsganj and Executive Engineer, Bundhi Division-II. The Tribunal noted that the appellant had produced Form 26AS and certificates issued by the Executive Engineer, Bundhi Division-II and the Executive Engineer, Irrigation Construction Division, Robertsganj, Sonbhadra. The certificates showed that the services comprised soil work on canal Kurugul Rajwaha, construction of a culvert on a village drain and soil work at Sarayeegarh Minor.
The Tribunal found that these services were covered under Serial No. 12(d) of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 relating to canal, dam or other irrigation works. It further observed that there was no ambiguity regarding the nature of the services provided, as recorded by both the lower authorities.
Accordingly, the Tribunal held that the impugned order could not be sustained. It set aside the service tax demand of ₹87,861 and also set aside the penalties imposed under Sections 78, 77(1) and 77(2) of the Finance Act, 1994. The appeal was allowed with consequential relief, if any, in accordance with law.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
The present appeal has been filed by the Appellant assailing the Order-In-Appeal No.02/ST/Appl/Alld/2026 dated 15.01.2026 passed by the learned Commissioner (Appeals) CGST and Central Excise, Allahabad.
2. Briefly stated, the facts of the case are that the Appellant Shri Ravindra Nath Singh is registered with RES (Rural Engineering Services) Department of Uttar Pradesh State Government which is a nodal agency for construction work of different Government and Semi-Government bodies. The payments received for the Financial Year 2016-17 are as under:-
3. The Appellant is also registered under U.P. V.A.T. Act, however, is not registered with the Service Tax Department, on the bona fide belief that services provided by him were not liable to Service Tax. Before the Adjudicating Authority, the Appellant submitted copy of Exemption Notification No. 25/2012-ST dated 20.06.2012. Certificate issued by RES in respect of contract work done by the Appellant, Abstract of Agreements/ Bill of quantity issued by RES, ‘Karyadesh’ issued by Zila Panchayat Varanasi & Chandauli, Copy of Form 26AS for 2016-17 & 2017-18, assessment order passed by VAT Authorities for F.Y.2076-17 & 2017-18.
4. The Adjudicating Authority observed as under:-
“6.2.1 On going through the written submission of the party along-with copy of documents submitted, I find that the party had provided works contract services to RES in the nature of ‘construction of C. C. Road and K.C. Drain’ and payment of Rs. 4315775/- was received after TDS deduction u/s 194C of the Income Tax Act, 1961. Certificate issued by Executive engineer, RES, Sonebhadra Division & copy of agreement No. 26/EE/RED/SBR/ Dt 17.08.2016, 23IEE/RED/SBR(DI 17.08.2016 and 30/EE/RED/SBR/ Dt. 20.09.2015 as provided by the party support the claim of the party for RES payment and it is found to be genuine.
6.2.2 As regards work done for Zila Panchayat Varanasi &Chandauli, the party has submitted copy of ‘Karyadesh’ dated 14.09.2016 wherein they had undertaken the work of ‘Interlocking of Road’ and received payment of Rs.1552100/-after TDS deduction uls 194C of the Income Tax Act, 1961. The claim of the party for exemption for Receipt of Rs. 1552100/- is found to be genuine.
6.2.3 The party has not provided any supporting document such as work order/agreement, certificate, bill/invoice in respect of nature of work done /services provided to Irrigation Construction Division Robertsganj & Executive Engineer Bundhi Division-II, though they had received Rs. 106670/- & Rs.I79068/- respectively as per Form 26A5 for 2016-17. Thus, I find that the party’s contention is not supported with documentary evidences in respect of amount received from these Departments and hence benefit of exemption can not be extended for such receipts.
6.3.1 Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 issued by CBIC, provides exemption to the following services:
“12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of —
a. a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
b. a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
c. a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;
d. canal, dam or other irrigation works;
e. pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
f. a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;”
The Commissioner passed the following order:-
ORDER
i. I confirm the Service Tax (including applicable Cess) demand of Rs. 87,861/- (Rupees Eighty Seven Thousand Eight Hundred Sixty One only) under section 73(2) read with section 73(1) of the Finance Act, 1994.
ii. I drop the service tax demand of Rs.8,80,181/- ( Rs. Eight Lakh Eighty Thousand One Hundred Eighty one only) in view of the above observations.
iii. I order for recovery of interest under Section 75 of the Finance Act, 1994 at appropriate rate on the confirmed amount of service tax as mentioned at (i) above.
iv. I impose a penalty of Rs. 87,861/- (Rupees Eighty Seven Thousand Eight Hundred ‘- Sixty One only) upon the party under Section 78 of the Finance Ac! L994. The pany shall be eligible for reduced penalty specified in second and third proviso to Section 78 of the Act, subject to fulfillment of conditions specified therein as mentioned in para 6.5 above.
v. I impose a penalty of Rs. 10,000/- (Rupees Ten Thousand Only), upon the party under. Section 77(1) of the Finance Act, 1994 for contravention of provisions of Section 69 of the Act read with Rule 4 of the Rules.
5. Being aggrieved, Appellant filed appeal before the First Appellate Authority and the learned Commissioner (Appeals) vide the impugned order rejected the appeal before him on the grounds that concrete documentary evidence viz. copy of challans, receipts, tax invoices, log books, measurement books, work experience certificates granted by the concerned department on successful completion of works contract, bank statements, stock register, sub-contract agreement, VAT Registration certificates, VAT returns etc. were not produced which could reveal the exact nature of services rendered by them and also that whether they were covered under any clause of the mega exemption notification. Being aggrieved, the Appellants are in appeal before the Tribunal.
6. Heard both the sides and perused the appeal records.
7. I find that the only dispute before me is regarding the nonpayment of Service Tax on the services provided by the Appellant to the Executive Engineer, Irrigation Construction Division Robertsganj and Executive Engineer, Bundhi Prakhand, Division II, Robertsganj, Sonbhadra.
8. I find that the services provided by the Appellant to the Executive Engineer, Irrigation Construction Division, Roberstganj and Bundhi Division II for carrying out soil work on canal kurugul rajwaha, construction of pulia on nala in village and soil work at sarayeegarh minor taking. In support they have provided the copy of Form 26A5 and certificate issued by Executive Engineer Bundhi Division-II, and Executive Engineer, Irrigation Construction Division Robertsganj, Sonbhadra.
9. I find that these services are covered by the Mega Exemption Notification No.25/2012-ST dated 20.06.2012 issued by CBIC under Serial No.12(d). There is no ambiguity as regards the provision of services which has been duly recorded by both the Lower Authorities. Since the services are covered by the Mega Exemption Notification, the impugned order cannot be sustained and is accordingly set aside. The demand of Service Tax amounting to Rs.87,861/- is set aside. Penalties imposed under Section 78, 77(1) and 77(2) of the Finance Act, 1994 are also set aside. The appeal filed by the Appellant is allowed with consequential relief, if any, as per law.
(Dictated and pronounced in open court)
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