Case Law Details
Sundardas Gyanchand Vs Commissioner of CGST & Central Excise (CESTAT Delhi)
CESTAT Delhi dismissed the appeal filed by M/s. Sundardas Gyanchand and upheld the Commissioner’s de novo order confirming a service tax demand of ₹10,93,968 along with interest and penalties.
The dispute originated from a Show Cause Notice dated 07.10.2010 proposing a service tax demand of ₹58,56,059. The matter had earlier been adjudicated by the Commissioner, and on appeal, the Tribunal remanded the case for fresh examination in light of the Supreme Court’s decision in Larsen & Toubro Ltd. During the de novo proceedings, the Commissioner granted multiple opportunities for personal hearing. After considering the facts, contractual terms, and use of materials in the execution of work, the Commissioner concluded that the contracts entered into by the appellant were in the nature of “works contract service.” Consequently, he allowed the benefit of abatement and reduced the demand from ₹58,56,059 to ₹10,93,968.
Before the Tribunal, the appellant contended that the Commissioner had not determined the classification of the services rendered. The Tribunal rejected this contention, noting that the Commissioner had specifically examined the contracts and classified them as “works contract service,” which formed the basis for the reduced tax demand.
The appellant also argued that it had not provided “construction of residential complex service.” The Tribunal observed that the impugned order did not confirm the demand under that category but under “works contract service,” making the argument irrelevant.
Another contention was that Jaipur Development Authority (JDA) had collected service tax and therefore should be liable to pay it. The Tribunal rejected this argument, holding that the appellant was the service provider and had received consideration for the services rendered to JDA. Since JDA was the service recipient, it could not be treated as the person liable for the appellant’s service tax obligations.
The appellant further claimed that the demand was barred by limitation because there was no intention to evade tax. The Tribunal did not accept this submission, observing that the appellant had neither obtained service tax registration, paid service tax, nor filed returns. The tax liability came to light only through investigation.
FULL TEXT OF THE CESTAT DELHI ORDER
M/s. Sundardas Gyanchand1 filed this appeal to assail the Order dated 21.12.20182 passed by the Commissioner in the de-novo proceedings. A Show Cause Notice dated 7.10.20103 was issued to the appellant the proposals in which were decided by the Commissioner by an Order dated 27.11.2013. On the appellant’s appeal, this tribunal, by Final Order dated 15.9.2017 remanded the matter back to the Commissioner to examine the matter and decide in the light of the judgment of the Supreme Court in Larsen & Toubro Ltd.4
2. In pursuance of the directions of this Tribunal, the Commissioner granted personal hearing to the appellant on 20.9.2018 but the appellant sought an adjournment. He fixed the next hearing on 15.10.2018 and again the appellant sought an adjournment and hence he fixed a third personal hearing on 31.10.2018 when Shri Abhijeet Srivastava, advocate appeared and submitted a written reply.
3. After considering the facts of the case and the nature of contracts at length, the Commissioner passed the impugned order holding that the contracts which the appellant had entered into were in the nature of works contracts and therefore, allowed abatement. He confirmed demand of Rs.10,93,968/- only with interest and penalties instead of Rs. 58,56,059/- proposed in the SCN.
4. None appeared on behalf of the appellant despite repeated opportunities. We have heard learned authorised representative for the Revenue and perused the grounds taken in the appeal.
5. The first ground of appeal is that the Commissioner had not decided the classification of the service rendered. We find that this assertion is incorrect because in the impugned order passed in the denovo proceedings, the Commissioner examined the nature of the work done and the use of the materials and specifically held that the nature of services was ‘works contract service’ and for that reason confirmed a demand of service tax of only Rs. 10,93,968/- which was way less than what was proposed in the SCN.
6. The second ground of appeal is that the appellant had not rendered service of construction of residential complex service. We find that the demand was not confirmed in the impugned order under this heading but was confirmed under ‘works contract service’.
7. The third ground of appeal is that the JDA (Jaipur Development Authority) had collected service tax and therefore, it should pay the service tax. We find that the demand is on the services rendered by the appellant and not the services rendered by JDA. The appellant was the service provider who received consideration for its services from the JDA. The assertion that JDA collected service tax is meaningless because JDA could not have either collected any consideration or service tax from the appellant because it was not the service provider but was the service recipient.
8. The demand is barred by limitation because the appellant had no intention to evade. This submission also cannot be accepted. It is not a case where the appellant had taken service tax registration, paid service tax, filed returns, etc. It is only the investigation which led to the discovery of the service tax liability of the appellant.
9. The services rendered by the appellant are in the nature of works contract service. This submission does not negate the confirmation of demand in the impugned order which was also under works contract service.
10. In view of the above, we find that the impugned order calls for no interference which is accordingly sustained. This appeal is accordingly, dismissed.
(Order Pronounced on 29/05/2026)
Notes:
1 Appellant
2 Impugned order
3 SCN
4 2015 (39) STR 912 (SC)
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