Case Note & Summary
The petitioner, M/s. Suman Construction, a government-registered civil contractor, filed a writ petition under Articles 226 and 227 of the Constitution of India before the Bombay High Court, Aurangabad Bench. The petitioner is exclusively engaged in executing civil construction contracts for various departments of the Government of Maharashtra, primarily for the construction of roads through the Public Works Department. The petitioner asserted that, in light of the Ministry of Finance Notification No. 25/2012-ST dated 20.06.2012, services relating to construction of roads for the Government are wholly exempt from service tax. Consequently, the petitioner did not register under the service tax regime. However, the Additional Commissioner, CGST and Central Excise, Nagpur-1 passed a common order dated 20.03.2023 for the financial years 2015-2016 and 2016-2017, demanding service tax from the petitioner. The petitioner also filed an application for rectification of mistake under Section 74 of the Finance Act, 1994, which was rejected by the Joint Commissioner, CGST and Central Excise, Aurangabad on 19.03.2025. The petitioner sought declarations that the common order dated 20.03.2023 is non-est and bad in law, and that in view of Notification No. 25/2012-ST, the works of construction of roads executed for government departments are exempted from service tax. The petitioner also prayed for quashing of the order dated 19.03.2025 rejecting the rectification application. The court analyzed the provisions of Section 93 of the Finance Act, 1994 and Notification No. 25/2012-ST, and held that the services provided by the petitioner for construction of roads for government departments are wholly exempt from service tax. The court further held that the impugned order dated 20.03.2023 was passed without granting an opportunity of hearing, violating principles of natural justice. The court allowed the writ petition, quashed the common order dated 20.03.2023 and the order dated 19.03.2025, and declared that the petitioner is entitled to exemption from service tax for the relevant period.
Headnote
A) Service Tax - Exemption - Construction of Roads for Government - Notification No. 25/2012-ST dated 20.06.2012 issued under Section 93 of Finance Act, 1994 - The petitioner, a government contractor, executed road construction contracts for the Public Works Department of Maharashtra. The court held that the services are wholly exempt from service tax under the said notification, and the impugned order demanding tax is non-est and bad in law. (Paras 1-9) B) Rectification of Mistake - Section 74 of Finance Act, 1994 - Rejection of application for rectification - The Joint Commissioner rejected the petitioner's application for rectification of mistake. The court held that the rejection was erroneous as the mistake was apparent from the record, and set aside the order dated 19.03.2025. (Paras 1-9) C) Natural Justice - Opportunity of Hearing - The impugned order dated 20.03.2023 was passed without granting an opportunity of hearing to the petitioner. The court held that the order violates principles of natural justice and is liable to be quashed. (Paras 1-9)
Issue of Consideration
Whether the petitioner is entitled to exemption from service tax for construction of roads for government departments under Notification No. 25/2012-ST dated 20.06.2012, and whether the impugned orders are liable to be set aside.
Final Decision
The writ petition is allowed. The common order dated 20.03.2023 passed by the Additional Commissioner, CGST and Central Excise, Nagpur-1 and the order dated 19.03.2025 passed by the Joint Commissioner, CGST and Central Excise, Aurangabad are quashed and set aside. It is declared that the petitioner is entitled to exemption from service tax for the construction of roads for government departments under Notification No. 25/2012-ST for the financial years 2015-2016 and 2016-2017.
Law Points
- Exemption from service tax
- Notification No. 25/2012-ST
- Section 93 of Finance Act
- 1994
- Rectification of mistake under Section 74
- Natural justice
