Service Tax Demand Set Aside for Fresh Review of Government Work Contracts: Patna HC

Krishna Kant Thakur Vs Union of India (Patna High Court)

Summary: The Patna High Court considered the writ petition filed by Krishna Kant Thakur, a contractor engaged in construction work of roads, bridges and related works, concerning services rendered to the Rural Works Department, Road Construction Department and Bihar Rajya Pul Nirman Nigam Limited during financial years 2015-16 and 2016-17.

The petitioner challenged the order dated 14.09.2023 by which the CGST authorities had demanded service tax including cess of Rs. 4,03,53,185/- under Section 73 of the Finance Act, 1994, Section 119 of the Finance Act, 2015 and Section 116 of the Finance Act, 2016, read with Section 174 of the CGST Act, 2017, together with interest and an equal penalty under Section 78 and a further penalty of Rs. 10,000/- under Section 77(1) of the Finance Act, 1994. The petitioner contended that the payments received for the relevant government works were exempt under Entry 12 of Notification No. 25/2012-ST dated 20.06.2012, read with Section 102 of the Finance Act, 1994. The petitioner stated that the relevant agreements and other documents had been furnished to the authorities, including through an email dated 31.05.2021, but were not considered. In an earlier round, the Division Bench had directed the petitioner to avail the appellate remedy under Section 107 of the B.G.S.T. Act because the agreements had not been produced along with the objections, while expressly making no observation on merits.