Case Details: Bihar Rajya Pul Nirman Nigam Ltd. Versus Union of India(2025) 30 Centax 517 (Pat.)
Judiciary and Counsel Details
- Rajeev Ranjan Prasad & Sourendra Pandey, JJ.
- S/Shri D.V. Pathy, Sr. Adv., Sadashiv Tiwari, Hiresh Karan, Ms Shivani Dewalla, Prachi Pallavi, Advs., for the Petitioner.
- S/Shri Dr. K.N. Singh, Sr. Adv. (ASGI) S/Shri Anshuman Singh, Sr. SC, CGST and CX and Shivaditya Dhari Sinha, Adv., for the Respondent.
Facts of the Case
The petitioner, a State government company incorporated under the Companies Act, 1956 with 100% shareholding held by the State government, was engaged in providing technical assistance for the construction of roads and bridges. Its activities involved submitting detailed project reports to the State government, inviting bids, executing agreements with contractors, supervising the work, handing over completed infrastructure to the government, and assigning toll collection vendors. The petitioner received consideration from the State government in the form of ‘centage’ being a fixed percentage of the construction cost, and also received a share of toll revenue from the toll vendors. It was not awarded any contract by the State government during the financial years 2015–16, 2016–17, and 2017–18 (up to June 2017).
The petitioner claimed exemption from service tax under clause 13(a) of Notification No. 25/2012-Service Tax, dated 20-06-2012’, asserting that it qualified as ‘government’ under Section 65B(26A), a ‘local authority’ under Section 65B(31), or a ‘governmental authority’ under para 2(s) of the said Notification. It also relied upon ‘Circular No. 192/02/2016-Service Tax, dated 13-04-2016’, which clarified that even government or local authorities are liable to pay service tax when they receive fee or consideration for performing activities. The matter was accordingly placed before the Patna High Court.
High Court Held
The High Court held that the petitioner was not ‘government’ within the meaning of Section 65B(26A) of the Finance Act, 1994. It further held that the petitioner did not qualify as a ‘local authority’ under Section 65B(31), and did not fall within the definition of governmental authority’ under para 2(s) of ‘Notification No. 25/2012-Service Tax, dated 20-06-2012’. The Court noted that the petitioner had not been awarded any contract by the State government during the relevant period, and the services rendered by way of technical assistance were not covered under the negative list in Section 66D of the Finance Act, 1994. The exemption under clause 13(a) of the said Notification was also denied, as there was no cogent evidence that the petitioner had itself provided services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of roads or bridges for use by the general public.
List of Cases Cited
- Assistant Collector v. Dunlop India Ltd. — 1985 (19) E.L.T. 22 (S.C.) — Referred [Para 42]
- Commissioner v. Northern Operating Systems Pvt. Ltd. — 2022 (61) G.S.T.L. 129 (S.C.) — Distinguished [Paras 64, 66]
- Commissioner v. Shapoorji Pallonji & Company Pvt. Ltd. — 2023 (79) G.S.T.L. 145 (S.C.) = (2023) 11 Centax 180 (S.C.) — Followed [Para 48]
- Doypack Systems Pvt. Ltd. v. Union of India — 1988 (36) E.L.T. 201 (S.C.) — Distinguished [Paras 64, 65]
- Hindustan Steel Ltd. v. State of Orissa — 1978 (2) E.L.T. (J 159) (S.C.) — Referred [Para 32]
- Punjab National Bank v. O.C. Krishnan — 2001 (6) SCC 569 — Referred [Para 42]
- Pushpam Pharmaceuticals Company v. Collector — 1995 (78) E.L.T. 401 (S.C.) — Distinguished [Paras 64, 73, 76]
- Shapoorji Paloonji & Company Pvt. Ltd. v. Commissioner — 2016 (42) S.T.R. 681 (Pat.) — Relied on [Paras 29, 30, 46, 48, 56]
- State of Maharashtra v. Greatship (India) Ltd. — 2022 (382) E.L.T. 3 (S.C.) — Referred [Para 42]
- Titaghur Paper Mills Co. Ltd. v. State of Orissa — (1983) 2 SCC 433 — Referred [Para 42]
- Union of India v. Rajasthan Spinning and Weaving Mills — 2009 (238) E.L.T. 3 (S.C.) — Referred [Para 41]
- United Bank of India v. Satyawati Tandon — (2010) 8 SCC 110 — Referred [Para 42]
- Wallace Flour Mills Company Ltd. v. Collector — 1989 (44) E.L.T. 598 (S.C.) — Relied on [Para 74]
List of Departmental Clarification Cited
- C.B.E. & C. Circular No. 192/02/2016-S.T., dated 13-4-2016 [Paras 58, 59]
- C.B.I. & C. Circular No. 178/10/2022-GST, dated 3-8-2022 [Para 13]
- C.B.I. & C. Circular No. 152/3/2022-S.T., dated 22-2-2022 [Para 19]
List of Notifications Cited
- Notification No. 25/2012-S.T., dated 20-6-2012 [Paras 7, 34, 37, 46, 51, 55, 56]
- Notification dated 30-1-2014 [Para 47]
- Notification No. 6/2015-S.T., dated 1-3-2015 [Para 56]
