M/S MD Alal Uddin Vs the Union of India and 5 Ors.

Heard Ms. N. Hawelia, learned counsel for the petitioner. Also heard Dr. B. N. Gogoi, learned Standing Counsel, CGST, and Mr. A. Hussain, learned counsel appearing on behalf of Mr. M. Sharma, learned counsel for the respondents.

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2. Challenge made in the present writ petition is to the Order-in-Original No. 28/Assistant Commr/TEZ/ST/2021-22 dated 08.03.2022, passed by the Assistant Commissioner, Central Goods & Services Tax, Tezpur, Government of India, whereby a service tax demand of Rs. 15,11,247/- (Rupees fifteen lakhs eleven thousand two hundred forty seven) only for the period from the financial year 2014-15 to 2017-18 (till June, 2017) has been confirmed under the proviso to Section 73(1) of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994. By the said order, interest under Section 75 of the Finance Act, 1994 has also been directed to be recovered, a penalty of Rs. 15,11,247/(Rupees fifteen lakhs eleven thousand two hundred forty seven) only has been imposed under Section 78 of the Finance Act, 1994 and a further penalty of Rs. 5,000/- (Rupees five thousand) only has been imposed under Section 77 of the Finance Act, 1994. The petitioner has also put to challenge the Recovery Notices dated 17.04.2023, issued by the Deputy Commissioner, Central Goods & Services Tax, Tezpur Division, whereby the bank accounts of the petitioner

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maintained with the State Bank of India, Tezpur Branch, bearing Account No. 20036902941, and ICICI Bank Limited, Tezpur Branch, bearing Account No. No. 070905500239, have been attached for recovery of the aforesaid dues.

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4. The petitioner is engaged as a sub-contractor in execution of various infrastructure projects relating to construction of roads, national highways, bridges and allied civil works. The petitioner had undertaken various works as a sub-contractor under M/s Gammon India Limited, including construction of well foundations and sub-structures in connection with the Bogibeel Rail-cum-Road Bridge Project as well as other road and bridge projects at Tezpur and Dibrugarh.

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5. It is the case of the petitioner that the services rendered by it were in the nature of works contract services provided as a sub-contractor in respect of infrastructure projects which were exempt from levy of service tax under the applicable statutory provisions. The payments received from M/s Gammon India Limited in respect of the aforesaid works were subjected to deduction of tax at source under the provisions of the Income Tax Act, 1961 and were reflected in Form 26AS. The entries appearing in Form 26AS merely reflected payments received against execution of the contractual works and could not, by themselves, constitute the basis for determination of service tax liability under the Finance Act, 1994.

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6. It is the contention of the petitioner that the respondent authorities, on the basis of information obtained from the Income Tax Department in Form 26AS pertaining to the financial years 2014-15 to 2017-18, initiated proceedings

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for recovery of service tax by invoking the provisions of Section 73 of the Finance Act, 1994. Pursuant thereto, an ex parte adjudication order dated 05.02.2020 came to be passed raising service tax demand along with interest and penalty against the petitioner. Being aggrieved, the petitioner approached this Court by filing WP(C) No. 3204/2021. This Court, by order dated 15.06.2021, set aside the said adjudication order and directed the respondent authorities to provide an opportunity of hearing to the petitioner and also permitted the petitioner to submit its reply to the show cause proceedings.

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7. Pursuant thereto, the petitioner submitted its reply on 23.08.2021 contending, inter alia, that the petitioner was merely a sub-contractor engaged in execution of exempted infrastructure projects under M/s Gammon India Limited and therefore, no service tax liability could be fastened upon it. All the relevant documents in support of his stand were furnished before the adjudicating authority. However, despite the reply submitted and the materials placed on record, the Assistant Commissioner, Central Goods & Services Tax, Tezpur, passed the impugned Order-in-Original dated 08.03.2022 confirming service tax demand of Rs. 15,11,247/- along with interest and penalty2.

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8. Ms. N. Hawelia, learned counsel for the petitioner, submits that the petitioner was engaged as a sub-contractor under M/s Gammon India Limited in connection with various infrastructure projects relating to roads and bridges and all payments reflected in Form 26AS were received from the said principal contractor. Referring to Circular No. 147/16/2011-Service Tax dated 21.10.2011 and Notification No. 25/2012-ST dated 20.06.2012, learned counsel submits that works contract services rendered by a sub-contractor in respect of exempted

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infrastructure projects are also exempt from levy of service tax and as such, no service tax liability could have been fastened upon the petitioner.

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She submits that the impugned demand has been raised solely on the basis of Form 26AS without any independent determination regarding the nature and taxability of the services rendered by the petitioner. Pursuant to the order passed by this Court in WP(C) No. 3204/2021, the petitioner had submitted its reply along with relevant documents demonstrating that it was functioning only as a sub-contractor under M/s Gammon India Limited. However, the respondent authorities proceeded to pass the impugned Order-in-Original on the ground that certain invoices had not been furnished, despite the fact that the petitioner's status as a sub-contractor stood established. She submits that the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 has been invoked without there being any allegation or finding of fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of tax. Therefore, she submits that the impugned Order-in-Original dated 08.03.2022 and the consequential recovery notices dated 17.04.2023 are liable to be set aside and quashed.

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9. By relying on judgment and order dated 09.01.2026, passed by this Court in the case of Technocom Vs. Union of India & Anr. , reported in (2026) 156 GSTR 602 (Gauhati), Ms. Hawelia, learned counsel for the petitioner, submits that this Court had allowed the writ petition in a similar matter and therefore, prays for grant of similar relief to the present petitioner.

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10. Dr. B. N. Gogoi, learned Standing Counsel, CGST, fairly submits that the case of Technocom (supra), as relied by the learned counsel for the petitioner, has been rendered on similar facts and law, which would cover the case of the

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present petitioner.

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11. Considered the submissions of the learned counsel for the parties and also perused the judgment and order dated 09.01.2026, passed by this Court in the case of Technocom (supra).

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12. The relevant paragraphs of the aforesaid judgment are reproduced hereinbelow:

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“32. Upon a perusal of the pleadings available before the Court, it is seen that the service tax liability of services by the petitioner was stated that the contracts undertaken by the Petitioner were pertaining to Railways and the same was exempted from payment of service tax under Entry No. 14 (a) of the Mega Exemption Notification No. 25/2012 -S.T., dated 20.06.2012 w.e.f. 01.07.2012 as amended.

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Therefore, under such circumstances, this Court is of the considered view that the determination made by the respondent authorities by issuing the demand cum show cause notice and the confirmation in the impugned order-in-original is contrary to the provisions of the Act and the law declared by the Apex Court as well as by the High Court. The impugned order-in-original is therefore is bad and the same is liable to set aside.

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A perusal of the Section 73 of the Finance Act reveals that the extended period in respect of recovery of service tax not levied or paid or short levied or short paid or erroneously refunded can be invoked only when any or more of the conditions prescribed under the proviso to the said section is present. Under the proviso to the said section, there are five situations when the extended period of limitation can be invoked. These are:

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(a) Fraud; or

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(b) Collusion; or

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(c) Willful misstatement; or

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(d) Suppression of facts; or

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(e) Contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax.

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Such conclusions as have been discussed above are contrary to the facts which are evident from the pleadings. In any view of the matter for invocation of the provisions of Section 73 for extension of the period of limitation, it must necessarily be a case which falls under any or all the conditions specified under the proviso to Section 73(1)

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of the CGST Act. From a plain reading of the impugned Order-in-Original and the relevant portions of which have been extracted above, it is evident that there is no finding by the Adjudicating Authority that the case of the petitioner can be considered to be a case which falls under the conditions specified in proviso to Section 73(1). Under such circumstances, the impugned Order-in-Original appears to the Court to have been assumption of jurisdiction by the revenue authorities which was not otherwise vested on the said authority. For the revenue authorities to invoke powers under Section 73(1), there must be a finding and a conclusion arrived at based on the facts of the case that the petitioner assessee had willfully and deliberately resorted to fraud, collusion, willful misstatement, suppression of facts of contravention of any of the provision thereunder with the intent to evade payment of service tax. Therefore, for invocation of the powers proviso to Section 73(1), there must be a conclusive finding arrived at by the Revenue authorities that the petitioner assessee had resorted to any or all for these acts or omissions with the sole intention to evade payment of service tax. Such finding is not discernable from the impugned Order-in-Original passed by the Revenue Authorities. Therefore, the assumption of jurisdiction of the Revenue under the proviso to Section 73(1) has to be concluded to be a jurisdiction assumed by the Revenue authorities not vested on it by the statute. Such assumption of jurisdiction therefore, being contrary to the provisions of the statute itself, the same is colourable and therefore it is held to be unauthorized.

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From a careful analysis of the judicial pronouncements as discussed above, it is clear that if an authority while making the inquiry rejects a consideration which is relevant and/or takes into consideration materials and other information which are not relevant, the said decision can be said to be a decision in excess or without jurisdiction. In the present case the adjudicating authority took into consideration the information available in form 26AS of the Income Tax Act, the sole basis for the purpose of levy of service tax. The authority did not consider the services rendered by the petitioner were exempted from levy of service tax or the liability to pay the service tax on the said services was on the recipient on the services. Since the adjudicating authority did not take into consideration those relevant materials which it was bound to take into consideration and on the other hand it had taken into consideration factors and materials, which if not irrelevant and not germane for deciding the liability of the service tax, cannot establish the liability of the assessee, then the said actions of the adjudicating authority is certainly without jurisdiction and/or is in excess of jurisdiction and thereby the impugned actions, orders and notices issued by the adjudicating authority are liable to interfered with by this Court in exercise of its extra ordinary jurisdiction under Article 226 of the Constitution of India.

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In the facts and circumstances of the case, it is the conclusion arrived at by this Court that such preconditions mandated by law under section 73(1) having not been fulfilled by the Revenue authorities, their assumption of jurisdiction under section 73(1) of the GST Act was completely unwarranted and revenue authorities could not have assumed the jurisdiction under section 73(1) unless these pre-conditions mandated and a conclusion thereto has been arrived at by the Revenue authorities before assumption of such jurisdiction. It is under these circumstances that notwithstanding the availability of statutory alternative remedy, this Court considers it

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an appropriate case to invoke its jurisdiction under Article 226 to interfere with the impugned order in original and to set aside and quash the order-in-original. Under these circumstances, the case laws referred to by the respondents will have no bearing in the facts and circumstances of the present proceedings. There is also no quarrel with the general proposition of law that in the face of statutory alternative remedy being available, a Writ Court would ordinarily not invoke its power of issuance of prerogative Writs. Since this Court has held that the levy of service tax on the petitioner by extending the limitation is contrary to the provisions of law, the natural corollary that would follow is that the levy of all penalty, surcharge and interest are also not leviable on the petitioner, this Court therefore issues a writ of certiorari setting aside the impugned order in original and it is ordered accordingly.

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Therefore the writ petition stands accordingly allowed. However no order as to cost. Pending I.A.s are also dismissed and the interim order if any stands merged.”

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13. A perusal of the aforesaid judgment shows that the co-ordinate Bench of this Court held that a service tax demand founded solely on Form 26AS, without any independent examination of the nature of services rendered and without recording the statutory preconditions necessary for invocation of the extended period of limitation under Section 73 of the Finance Act, 1994, is unsustainable in law. It is further held that such assumption of jurisdiction by the adjudicating authority would be unauthorized and liable to be interfered with in exercise of powers under Article 226 of the Constitution of India. Consequently, the impugned order-in-original in that case was set aside and quashed together with the consequential demand of interest and penalties.

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14. In the present case, both the learned counsel for the parties are in consensus that the issue involved stands covered by the decision of the coordinate Bench in Technocom (supra), to which this Court is in full agreement with. Thus, I am of the considered opinion that no further adjudication is required in the present proceedings as the issue has already settled by this Court. Thus, the petitioner is entitled to similar relief as granted in Technocom (supra).

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15. Accordingly, the impugned Order-in-Original dated 08.03.2022 passed by

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the Assistant Commissioner, Central Goods & Services Tax, Tezpur, Government of India, is hereby set aside and quashed. Consequently, the demand of service tax, interest and penalties imposed upon the petitioner pursuant thereto shall also stands set aside.

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16. The Recovery Notices dated 17.04.2023 issued by the Deputy Commissioner, Central Goods & Services Tax, Tezpur Division, Government of India, attaching the petitioner's bank accounts maintained with the State Bank of India, Tezpur Branch and ICICI Bank Limited, Tezpur Branch, for recovery of the aforesaid dues, are also hereby set aside and quashed. Consequently, the attachment of the said bank accounts shall stand lifted forthwith.

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17. Writ petition accordingly stands allowed and disposed of.

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JUDGE

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Comparing Assistant

M/S MD Alal Uddin v. the Union of India and 5 Ors.

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M/S MD Alal Uddin v. the Union of India and 5 Ors.

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