2023 (1) TMI 807 - HC - Service Tax

Exemption from Service Tax - works contract service other than commercial nature to the Government, local bodies, statutory authorities, etc. - contention of the petitioner is that the service tax was exempted for the service rendered to the Government for public utility by notification No.25 of 2012 by the Central Government - HELD THAT - The Honourable Division Bench, in M/S. RAJU CONSTRUCTION, 2022 (12) TMI 1336 - MADRAS HIGH COURT , dismissed the said batch of writ petitions with certain observations - it was held that Services provided by these petitioners were declared services . Thus, the services provided by these petitioners would have been liable tax at 12% on the taxable value and later at 14% vide Notification No.14/2015-ST, dated 19.05.2015 with effect from 01.06.2015 but for the exemption vide Entry 12(a), (c) (f) to Mega Exemption Notification No.25/2012-ST, dated 20.06.2012 - services provided by these petitioners were exempted from payment of service tax vide Entry 12(a), (c) (f) to the Mega Exemption Notification No.25/2012-ST dated 20.06.2012. Writ petition is dismissed.

Summary

Issues:
Challenge to impugned notification withdrawing service tax exemption for works contract service; Liability of contractors for service tax assessment; Constitutionality of impugned notification; Violation of Article 14; Liability of Government to pay service tax; Violation of Article 300 (a); Remedies available to contractors; Challenge to impugned show cause notices; Direction to authorities to collect tax from recipients; Refund of tax paid by petitioners.

Analysis:
1. The writ petition challenges the impugned notification withdrawing the service tax exemption for works contract service provided to the Government. The petitioner, a first-class contractor for the PWD Department, contests the assessment order issued by the 2nd respondent for service tax liability amounting to Rs.48,23,854/-. The petitioner argues that the withdrawal of the exemption is against the principles of tax collection and has been challenged in various writ petitions questioning the jurisdiction and authority of the respondents.

2. The petitioner contends that the impugned notification is unconstitutional and discriminatory as it affects public contractors of road projects and other public works. The petitioner asserts that the conditions of the contract with the Government do not mandate the inclusion of service tax, making the Government liable for payment rather than the contractors. The issue of liability and collection of service tax from the Government is raised, highlighting potential violations of fundamental rights.

3. The Division Bench, in a related case, dismissed similar writ petitions and directed petitioners to pay the service tax and recover it from the Government Departments. The Bench provided guidance on responding to show cause notices, seeking relief under relevant Acts, and pursuing legal remedies to recover amounts from service recipients. The Bench rejected challenges to the impugned notification and related orders, emphasizing the availability of legal avenues for petitioners to address tax liabilities.

4. In line with the Division Bench's order, the Court in this case dismisses the writ petitions while instructing petitioners to pay the service tax and recover it from the Government Departments. The Court underscores the need for compliance with the directions issued by the Bench, ensuring that petitioners follow the outlined procedures. No costs are awarded, and connected miscellaneous petitions are closed, aligning with the resolution provided in the related judgment.

This detailed analysis covers the multiple issues raised in the legal judgment, addressing the challenges to the impugned notification, liability for service tax assessment, constitutional concerns, remedies available to contractors, and the direction for tax collection and recovery.