Works contract services provided to governmental authorities for agricultural marketing functions are exempt under Entry 60 of Notification No. 25/2012-ST, and demands based on interpretation of law without evidence of fraud or suppression are barred by the extended period of limitation.

K. ANPAZHAKAN:

The present appeal has been filed by the Madam Maya Devi (hereinafter referred to as Appellant) assailing the Order-In- Appeal No. 1121-ST/APPL/LKO/2022 dated 09/12/2022 passed by Commissioner (Appeals), Customs, CGST & Central Excise, Lucknow wherein the demand of Rs.12,11,451/- has been confirmed against the Appellant along with interest. Penalty imposed under Section 78 was also confirmed.

The facts of the case are that the Appellant is a provider of Works Contract service, having service tax registration no. AHOPD8119JSD001. During the relevant period of 2016-17, the Appellant mainly provided works contract service to M/s Rajya Krishi Utpadan Mandi Parishad, Uttar Pradesh, in relation to construction, repair and painting of shops pertaining to Mandi Samiti, Lakhimpur. M/s Rajya Krishi Utpadan Mandi Parishad Uttar Pradesh and Mandi Samiti Lakhimpur are ’Governmental Authorities’. Under the bonafide belief that Works Contract service provided to them to Governmental Authorities are exempt from payment of service tax under Entry No. 60 of Notification No. 25/2012-ST , dated 20.06.2012, the Appellant did not pay service tax.

Show Cause Notice No. 352/AC/CGST/Sitapur/R- lakhimpur/2021 was issued to Appellant demanding service tax of Rs. 48,33,913/- under the proviso to Section 73 of the Finance Act, 1994 along with interest. The Notice also proposed imposition of penalty under section 78 along with various other penalties. Appellant filed defense reply contesting the demand of tax and penalty etc. on the ground of the service rendered by them to the Government authorities are exempt from payment of service tax. Appellant submitted all the agreements/work orders etc.

On adjudication, Order-In-Original No. 87/AC/ST/STP/2022 was passed, wherein the demand of tax service tax of Rs. 31,03,269/- has been dropped and balance amount of Rs. 17,30,644/- was confirmed along with interest under the Proviso to Section 73(1) of the Finance Act, 1994. The Ld. Adjudicating Authority has held that services provided to Mandi Samiti Lakhimpur/Rajya Krishi Utpadan Mandi Samiti Uttar Pradesh are not exempt from payment of service tax.

Appellant filed Appeal No. 424-ST/2022 before Commissioner (Appeals), Lucknow submitting therewith that service provided by them was exempt. Imposition of penalty under section 78 was assailed on the ground that there was complete absence of the element of fraud, suppression etc. The Ld. Commissioner (Appeals) passed the impugned Order-in-Appeal No. 1121- ST/APPL/LKO/2022 dated 09.12.2022, wherein he has reduced the demand of service tax from Rs. 17,30,644/- to Rs. 12,11,451/- by giving benefit of abatement of 30% being repair work and upheld penalty U/s 78 of the Finance Act. Other penalties were set aside.

Aggrieved against the confirmation of the demand s of service tax along with interest and penalty, the Appellant has filed this appeal.

The learned Counsel for the Appellant submits that the Department has confirmed the demand of Service Tax on certain services rendered by the, which are tabulated below:

[[IMG_1]]

Rajya Krishi Utpad Mandi Parishad, Lakhimpur:-

Appellant provided the services of Works Contract to Rajya Krishi Utpad Mandi Parishad/Mandi Samiti by way of construction, repairing and painting of shops pertaining to Mandi Samiti Lakhimpur. Rajya Krishi Utpad Mandi Parishad and Mandi Samiti are “GOVERNMENTAL AUTHORITIES” as they were set up by an Act of state legislature viz. UTTAR PRADESH KRISHI UTPADAN MANDI ADHINIYAM, 1964.

Mandi Samiti has been constituted by Section 12 of the said Act which is extracted below:

“12. (1) For every Market Area there shall be a Committee to be called the Mandi Samiti of that Market Area, which shall be a body corporate having perpetual succession and an official seal and, subject to such restrictions or qualifications, if any, as may be imposed by this or any other enactment, may sue or be sued in its corporate name and