Deepa Construction Vs Commissioner of Central Goods Service Tax (CESTAT Delhi)
The appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi arose from an Order-in-Original dated 28.05.2020 confirming a service tax demand of ₹2,83,27,069 along with interest under Section 75, penalties of ₹10,000 each under Sections 77(1) and 77(2), and an equivalent penalty under Section 78 of the Finance Act, 1994.
The appellant, a partnership firm established in 2004, was engaged in construction and works contract services for entities including NDMC, TRF Ltd, Dee Tech Project Ltd, and Tecpro Systems Ltd. Based on scrutiny of TDS/ITR data for financial years 2013-14 and 2014-15, the Department alleged non-payment of service tax and issued show cause notices covering the period 2013-14 to June 2017. The adjudicating authority confirmed the demand on the ground that service tax had been paid under the service tax registration obtained on the PAN of a partner, Shri K. Surendran Nair, and not under the partnership firm’s registration.
The appellant contended that service tax had been duly paid, though under the partner’s registration, and that this arrangement had existed since 2005 without objection from the Department. It was argued that the Department never disputed the registration earlier and had accepted ST-3 returns and tax payments for previous years. The appellant submitted that the liability of partners in a partnership firm is not limited and relied on case law to argue that tax paid under the partner’s PAN should be treated as discharge of the firm’s liability.
