Dipak Kumar Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
CESTAT Kolkata allowed the appeal against a service tax demand relating to services rendered during 2015-16. A Show Cause Notice dated 23.12.2020, based on Income Tax Form 26AS, demanded ₹4,10,350 with interest and penalty by invoking the extended period. The appellant submitted that it performed subcontractor work for the Ghar Ghar Jal Yojna and that the services were exempt under Sl. Nos. 25 and 29(h) of Notification No. 25/2012-ST dated 20.06.2012. The appellant therefore neither obtained service tax registration nor paid service tax.
The adjudicating authority confirmed the demand, while the Commissioner (Appeals), after examining the factual and documentary material, reduced the demand to ₹1,94,997. Before the Tribunal, the appellant contended that the extended-period notice could not be sustained when issued solely on Form 26AS without proper verification. The Revenue submitted that part of the demand had been dropped after verification and defended the remaining demand relating to JCB hiring.
The Tribunal noted that the SCN was issued purely on the basis of Form 26AS. It found that the appellant had established that services were rendered to the main contractor in connection with a project covered by the exemption notification. The remaining demand related to hiring out a JCB to the same main contractor for the same project. Although the Tribunal observed that the appellant had no case on merits regarding this confirmed demand, it found that the appellant could have entertained a bona fide belief that service tax was not payable.
The Tribunal further noted that the SCN was issued in 2020 for services rendered in 2015-16 and that no verification had been conducted to determine the alleged classification when the SCN was issued. Following Shri Raj Kishore Bhagat Vs Commissioner of CGST & Central Excise, Patna, Final Order No.75235/2026 dated 12th February 2026, the Tribunal held the extended-period demand unsustainable and set aside the confirmed demand on account of time bar.
The appeal was allowed, with consequential relief, if any, available as per law.
Cases Discussed
- Shri Raj Kishore Bhagat Vs Commissioner of CGST & Central Excise, Patna (CESTAT Kolkata), Final Order No.75235/2026 dated 12th February 2026
FULL TEXT OF THE CESTAT KOLKATA ORDER
Based on the Income Tax Form 26AS, the appellant was issued a Show Cause Notice on 23.12.2020, for the turnover pertaining to year 2015-16. Invoking the extended period provisions, the SCN demanded Rs.4,10,350 along with interest and penalty. The appellant filed their reply stating that they are carrying out sub-contractor’s work for the Ghar Ghar Jal Yojna for the main contractor. The service is fully exempt under Sl No.25 and 29(h) of the Notification No.25/2012 ST dated 20.6.2012. Hence, they are not required to pay any Service Tax. In view of the exemption, they have not obtained any Service Tax registration. After due process, the Adjudicating authority confirmed the demand along with interest and penalty. On appeal, the Commissioner (Appeals), after going through the factual and documentary evidence details, has modified the Service Tax demand to Rs.1,94,997. Being aggrieved, the appellant is before the Tribunal.
2. The Learned Consultant submits that the appellant was providing all the services to the main contractor. Admittedly, as already noted by the Commissioner (Appeals), the project for which the work was undertaken, full Service Tax exemption was available. Based on the bonafide belief that no Service Tax is payable, the appellant has neither charged any Service Tax nor has he paid any Service Tax to the Revenue Dept.
3. It is further canvassed that the issue of the SCN purely based on the Form 26 AS, Income Tax without proper verification, is legally not sustainable, when the SCN is issued for extended period. He relies on various case laws, including the decisions of this Bench. Accordingly, he prays that the appeal may be allowed.
4. The Learned AR, appearing for the Revenue submits that after verification, the Commissioner (Appeals) has dropped part of the confirmed demand. In respect of the JCB given on rent by the appellant to the main contractor, the same is not any service in respect of Work Contract. Therefore, he justifies the confirmed demand.
5. Heard both the sides and perused the appeal records.
6. Admittedly, the SCN has been issued purely based on the Form 26AS return. The appellant has been able to prove that they have rendered service to the main contractor, who was covered under the exemption Notification No.25/2012 ST dated 20.6.2012. At the first appellate stage, after going through the documentary evidence, the Commissioner (Appeals) has partly set aside the confirmed demand. The partly confirmed demand pertains to the hiring out of the JCB to the main contractor in respect of the same project. While on merits, the appellant has no case on the confirmed demand, I take the view that as the service was being rendered in respect of the same project to the same main contractor, the appellant could have entertained bonafide belief that no Service Tax is payable. The Tribunals have been consistently holding that the extended period demand is not sustainable when the demand is purely based on the Form 26AS Returns. In this case, the SCN has been issued in 2020 for the services rendered in 2015-16. No verification has been conducted to arrive at the alleged classification of the service, while issuing the SCN. Hence, following the ratio of the decided case law of Shri Raj Kishore Bhagat Vs Commissioner of CGST & Central Excise, Patna vide Final Order No.75235/2026 dated 12th February 2026, by this Bench on an identical issue, I set aside the confirmed demand on account of time bar.
7. The appeal stands allowed. The appellant would be eligible for consequential relief, if any, as per law.
(Dictated and pronounced in the open court)
