2023 (6) TMI 193 - CESTAT CHENNAI

Recovery of service tax alongwith interest and penalty - suppression of value of freight paid, hire charges, warranty charges and site formation and clearance services - benefit of exemption under Notification No. 17/2005-S.T. dated 07.06.2005 - extended period of limitation under Section 73(1) of the Finance Act, 1994 - HELD THAT:- There cannot be any dispute that the first Show Cause Notice, which was issued based on the audit objections, did consider all the relevant facts and thus, the concerned authority of the Department was very much aware of the relevant facts. Hence, while issuing the second Show Cause Notice, the very same facts could not be held as ‘suppression of facts’ by the appellant as these facts were very much in the possession / knowledge of the authorities.

The decision of the Hon’ble Apex Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [2006 (4) TMI 127 - SUPREME COURT] is apt - It was held the said case that Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. Thus there was no suppression of facts on the part of the assessee/appellant - the above ruling squarely applies to the facts of the case on hand.

It is also a fact borne on record that other than the audit observations, no other material facts have been brought on record by the Revenue. Hence, the allegation of suppression of facts made by the Revenue should fail and therefore, the impugned orders cannot sustain.

Merits of the case - HELD THAT:- The initial work essentially required the formation of service roads, which was essential for carrying the men and material / equipment and other accessories to the site of work and only thereafter could the clearance of jungle in and around the GTS level get started - the appellant did construct road, which was clearly essential in order to reach the place of work. Further, we also note that the contract belonged to a unit of the Government i.e., the Indian Navy, the scope of work was awarded initially to another Government Organization i.e., ECIL, and hence, the service of site formation and clearance, excavation and earth moving and demolition and other similar activities, were rendered to a Government organization, which is also exempt from the purview of Service Tax.

The appellant has claimed, rightly so, that it did construct roads as well as provide site formation and clearance, excavation and earth moving and demolition service and has thus, claimed the benefit of Notification No. 17/2005 ibid - the appellant is entitled to the benefit of the exemption Notification No. 17/2005 ibid.

The impugned demand cannot sustain for the reasons i.e., (i) the service was rendered to a Government organization and (ii) the same is also covered under the exemption Notification No. 17/2005 ibid., and therefore, the impugned demand cannot sustain.

The impugned orders on both the counts set aside - appeal allowed.