The liability for service tax under the Act rests with the service provider, despite receivership by primary contractors.

(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)

Date : 11-04-2025

This writ application has been preferred for the following reliefs:-

“(i) For issuance of an appropriate writ, order or direction in the nature of certiorari for quashing of and setting aside the order dated 09.02.2024 passed by the Commissioner, Goods and Service Tax (GST) as contained in impugned order to the present writ application.

(ii) For issuance of any other appropriate writ/writs, order/orders, direction/directions for which the writ petitioner would be found entitled under the facts and circumstances of the case.

” Brief facts of the case

2. The petitioner is a private limited company registered under the Companies Act having its head office/registered office at Patna in the State of Bihar. It is carrying on business of construction of efficient and reliable power substation and electrical transmission and distribution systems. The petitioner claims that it is often engaged in power construction works as a subcontractor on behalf of the primary contractors. It is stated that the petitioner-company has obtained all necessary licences and permissions from the State and local authorities according to the applicable laws.

3. According to the petitioner, one M/s Powertech Engineers (respondent no.4), having its registered office at Rajnagar in Ghaziabad in the State of Uttar Pradesh and M/s Kanti Prasad Mittal (respondent no.5) having its head office at Meerut in the State of Uttar Pradesh on 25.05.2015 received a work order from the Bihar State Power Transmission Company Limited, Patna (in short ‘BSPTCL’). A copy of the work order has been placed on record as Annexure ‘P/1’ to the writ application.

4. The petitioner-company received the work order of sub-contract from respondent nos.4 and 5 on 27.02.2015 and 30.05.2015 respectively. The copy of the sub-contract work orders with respondent nos.4 and 5 have been brought on record as Annexure ‘P/2’.

5. The petitioner-company was served with a demand- cum-show cause notice on 12.10.2021 alleging to have provided taxable services to its various clients as defined under Section 65B of the Finance Act, 1994 (hereinafter referred to as the ‘Act’) which falls neither under any of the clauses of Section 66D of the Act, as amended from time to time, nor under any of the entries of the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012, as amended. It was alleged that the petitioner company has contravened the provisions of Sections 67 , 68 and 70 of the Act read with Rules 4, 6 and 7 of the Service Tax Rules, 1994 (hereinafter referred to as the ‘Rules’) inasmuch as during 2016-17 to 2017-18 (up to June) (hereinafter referred to as the ‘relevant period’) the petitioner company failed to make proper assessment of it’s service tax liability and the applicable cesses amounting to Rs. 7,41,09,408/-. There was an allegation that the service tax has been evaded by the petitioner company which is liable to be recovered under proviso to Section 73 (1) of the Act along with applicable interest under Section 75 of the Act, penalties under Section 78 , 77(1)(a) and 77(1)(c) of the Act. The allegation was that of willful act of suppression of facts with intent to evade payment of service tax and failure to take registration in accordance with the provisions of Section 69 of the Act read with Rule 4 of the Rules. There was also a failure on the part of the petitioner-company to produce documents called for by the department.

6. It appears from the records that pursuant to the demand-cum-show cause notice dated 12.10.2021, the petitioner did not submit any defence reply against the charges alleged in the impugned show cause notice. Vide