The Senior Regional Manager vs. The Principal Chief Commissioner Of GST And Central Excise

Facts

The petitioner, Tamil Nadu Civil Supplies Corporation, a state-owned undertaking, engaged contractors for constructing additional godowns between November 2013 and November 2014. The assessing authority demanded service tax of Rs. 80,89,787/- for works contract services. An appellate authority, vide order dated 09.01.2019, set aside this demand, holding the construction of "Scientific Storage Godowns" exempted under Serial No. 12(a) of notification No. 25/2012-ST. Subsequently, a show cause notice was issued for non-payment of service tax for the period October 2015 to June 2017. The second respondent (original adjudicating authority) passed an order confirming this demand. The petitioner filed a writ petition challenging this order.

Held

The Court held that the writ petition was maintainable due to patent illegality in the impugned order. It found that the exemption under Serial No. 12(a) of notification No. 25/2012-ST, though temporarily withdrawn, was effectively reintroduced and bridged by notification No. 6/2015 and Section 102 of the Finance Act, 2016. This meant the exemption was available for the period in question, and the respondents' contention that the exemption was withdrawn was incorrect. The Court also noted that the original adjudicating authority ought not to have passed an order contrary to the subsisting appellate order, especially when no interim stay had been obtained by the respondents against the appellate order. Therefore, the impugned order was quashed. The ratio decidendi is that a public sector undertaking engaged in construction activities for governmental purposes, which are covered by a specific exemption notification, should continue to receive the benefit of that exemption even if there were temporary breaks in the notification, provided subsequent provisions bridge those breaks. The Court directed that the impugned order be quashed and allowed the writ petition.

Key Issues

1. Whether a writ petition is maintainable against an appealable order, concerning the levy of service tax on works contract services provided for the construction of godowns. 2. Whether the petitioner can rely on the appellate authority's order dated 09.01.2019, given that the respondents have filed an appeal before the Tribunal, and thus the appellate order has not attained finality. 3. Whether the exemption under Serial No. 12(a) of notification No. 25/2012-ST was withdrawn and therefore not applicable to the period in dispute. Petitioner's arguments: The petitioner contended that the construction activities were exempted under Serial No. 12(a) of the Mega Exemption Notification. They argued that even if the exemption was temporarily withdrawn, it was reintroduced and bridged by subsequent notifications and Section 102 of the Finance Act, 2016, ensuring continuous exemption. They also argued that the impugned order was passed in contravention of the subsisting appellate order. Respondents' arguments: The respondents argued that the writ petition was not maintainable as the impugned order was appealable. They further argued that the appellate order had not attained finality as an appeal was filed before the Tribunal. Lastly, they contended that the exemption clause relied upon by the petitioner was withdrawn.