M/S. Shema And Co. vs. The Union Of INDIA

Facts

The petitioner, M/s. Shema and Co., a Public Works Department Contractor, filed a writ petition challenging an Order in Original No.68/2022 dated 31.10.2022 passed by the Deputy Commissioner of GST and Central Excise, Madurai-I Division. This order confirmed a demand for service tax, along with interest and penalties, on works contract services provided by the petitioner to the Tamil Nadu Police Housing Corporation Limited (respondents 4 and 5) for the period from 01.10.2016 to 30.06.2017. The petitioner sought to quash this order and sought exemption from service tax for non-commercial works contract services rendered to government entities. Alternatively, the petitioner prayed for a direction to respondents 3 to 5 to pay the demanded service tax, penalty, and interest directly to the petitioner or the tax authority.

Held

The Court dismissed the writ petition, holding that the issue was covered by a previous Division Bench decision of the Principal Seat in W.P.No.24996 of 2019 dated 30.11.2022, and a subsequent order of the same bench in W.P.(MD) No.6852 of 2024. The Court's reasoning was that the petitioner, having been issued an Order-in-Original, was liable to pay tax. The Court directed the petitioner to avail the statutory remedy of filing an appeal before the Appellate Commissioner under Section 85 of the Finance Act, 1994. The petitioner was granted liberty to file the appeal within 30 days from the receipt of the order, and the Appellate Authority was directed to entertain the appeal without reference to limitation, subject to compliance with pre-deposit requirements as contemplated under Section 35F of the Central Excise Act, 1944, as made applicable to the Finance Act, 1994. The Court did not decide on the merits of the petitioner's claim for exemption or the alternative prayer for payment by government entities.

Key Issues

1. Whether the impugned Order in Original No.68/2022 dated 31.10.2022, demanding service tax, interest, and penalties on works contract services provided by the petitioner for the period 01.10.2016 to 30.06.2017, is liable to be quashed as illegal, arbitrary, and without jurisdiction? (Question of law and fact, turning on the interpretation and application of the Finance Act, 1994 and related provisions). Petitioner's contentions: The petitioner sought to quash the order and claimed exemption from service tax for non-commercial works contract services rendered to government entities. The petitioner also sought a direction for the government entities to pay the dues. Revenue's contentions: The revenue, through the Deputy Commissioner of GST and Central Excise, issued the impugned order confirming the demand for service tax, interest, and penalties.