M/S. Saryug Gautam Construction Private Limited, Jharkhand vs. The Commissioner, Central GST And Ce Commissionerate, Rourkela

Facts

The petitioner, M/s. Saryug Gautam Construction Private Limited, a company incorporated under the Companies Act, 1956, with its place of business in Jharkhand, challenged an Order-in-Original dated July 4, 2024, passed by the Commissioner, GST and Central Excise, Rourkela. This order, issued under Sections 73 and 75 of the Finance Act, 1994, pertained to financial years 2015-16 and 2016-17. The petitioner argued that it had not executed any work in Odisha during the relevant period and that its turnover was exempt under Mega Exemption Notification No. 25/2012-ST. The revenue contended that proceedings were initiated based on data from the Central Board of Direct Taxes regarding works contracts and consideration received, and that the petitioner had failed to register despite a liability. The petitioner also challenged a subsequent order dated June 23, 2025, rejecting its petition for rectification.

Held

The Court held that the petitioner was not afforded adequate opportunity to justify its claim for exemption and to raise the point of limitation. The Court found it expedient to set aside the Order-in-Original dated July 4, 2024, and the order dated June 23, 2025, rejecting the rectification application. The Court reasoned that the petitioner was entitled to one opportunity to furnish documents, including those submitted for the first time to the High Court. Citing the Supreme Court's decision in Tin Box Co. Vrs. CIT, the Court entertained the writ petition to grant the petitioner an opportunity to present its case, emphasizing the violation of principles of natural justice due to inadequate opportunity. The Court directed the Adjudicating Authority to pass a fresh order after affording the petitioner an opportunity to establish that the demand in Odisha would amount to double taxation, that its turnover falls within the Mega Exemption Notification, and that the adjudication process is barred by time. The petitioner was directed to appear before the Authority by April 6, 2026, and the adjudication process was to be completed within six weeks of receiving the order. The ratio is that where a party is denied adequate opportunity to present its case and raise valid defenses like exemption and limitation, the assessment order should be set aside and the matter remanded for fresh adjudication.

Key Issues

1. Whether the Commissioner, GST and Central Excise, Rourkela, transgressed jurisdiction by levying service tax on the petitioner's turnover in Odisha for the financial years 2015-16 and 2016-17, given the petitioner's contention that no work was executed in Odisha and its turnover was exempt under Mega Exemption Notification No. 25/2012-ST. (Question of law and fact, turning on the territorial jurisdiction and applicability of exemption notifications under Chapter V of the Finance Act, 1994). 2. Whether the petitioner was afforded adequate opportunity to present its case and justify its claim for exemption before the adjudicating authority, particularly in light of the alleged non-service of one show-cause notice and the rejection of its rectification petition. (Question of law, turning on the principles of natural justice and procedural fairness). Petitioner's Arguments: - The Commissioner lacked jurisdiction as no work was performed in Odisha and the turnover was exempt. - The demand raised was arbitrary, irrational, and untenable. - The rectification petition was rejected without appreciating the facts. Revenue's Arguments: - Proceedings were initiated based on data from the CBDT regarding works contracts and consideration received. - The petitioner did not register despite a liability. - The Adjudicating Authority acted on information regarding works contract execution and consideration received.