Delhi High Court
Mcm Construction And Real Estate ... vs Commissioner, Central Goods And ... on 14 July, 2025
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~217
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 14th July, 2025
+ W.P.(C) 9720/2025 & CM APPL. 40736/2025
MCM CONSTRUCTION AND REAL ESTATE PRIVATE LTD.
.....Petitioner
Through: Mr. Prabhat Kumar, Adv.
versus
COMMISSIONER, CENTRAL GOODS AND SERVICE TAX
.....Respondent
Through: Ms. Samiksha Godiyal, SSC, CBIC
with Mr. Tenging Bhutia & Mr. B. D.
Rao Kundan, Adv. (74889 46168)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE RAJNEESH KUMAR GUPTA
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner under Article 226
and 227 of the Constitution of India, inter alia, assailing the order dated 27th
September, 2024 passed by the Customs, Excise & Service Tax Appellate
Tribunal (hereinafter, 'CESTAT') as also the subsequent miscellaneous order
bearing no. 50484/2024 dated 15th May, 2025.
3. The brief background of the case is that the Central Goods and Service
Tax (hereinafter, 'CGST') Department had issued a Show Cause Notice
(hereinafter, 'SCN') on 7th March, 2008 seeking to raise certain demands
against the Petitioner. A further SCN also came to be issued on 28th November
2008. The details of the SCNs are set out below:-
S.No SCN No. & Date Period
Involved.
1. C.No. DL/ST/AE/Inquiry/MCM/Gr.IV09/05/5945
dated 07.03.2008 issued by the Commissioner of 2005-06 &
Service Tax, New Delhi 2006-07
2. C. No. DL-II/ST/R.12/SCN/23/08/14603 dated 2007-08
28.11.2008 issued by the Commissioner of Service
Tax, New Delhi
4. Replies were filed to both the SCNs by the Petitioner. The short issue
raised in the SCNs was that the Petitioner had not paid service tax on taxable
services. The question raised by the Petitioner was whether services provided
under construction of complex services and commercial or industrial
construction services would be liable to service tax. The Order-in-Original in
the present case came to be passed on 5th January, 2024.
5. The case of the Petitioner is that as the service provided by the
Petitioner was a composite works contract, no service tax was liable to be paid
by the Petitioner. In the Order-in-Original, exemption under Notification
No.18/2005-ST dated 7th June 2005, Notification No.15/2004-ST dated 10th
September, 2004 as amended and Notification No.1/2006 dated 1st March,
2006 was not granted to the Petitioner. The total demand raised upon the
Petitioner was to the tune of Rs. 4,28,08,029/- of service tax including
education cess and other cess. The total amount of service tax liability was
determined as Rs. 8,35,86,570/- out of which, the Petitioner had already made
some payments and the demand in the Order-in-Original was raised for the
remaining amounts.
6. The said Order-in-Original was challenged by the Petitioner before the
CESTAT. The Petitioner sought waiver of the pre-deposit. The Registry of
CESTAT had raised a defect for non-payment of the entire pre-deposit
amount in terms of Section 35F of the Central Excise Act, 1944.
7. Vide order dated 27th September, 2024, CESTAT directed the Petitioner
to deposit a sum of Rs. 17,21,477/-. A rectification application was filed by
the Petitioner before CESTAT seeking rectification of the earlier order which
was also rejected vide the order dated 15th May, 2025. Thus, both the orders
dated 27th September, 2024 and 15th May, 2025 are under challenge in this
petition.
8. The contention of ld. Counsel for Petitioner is that a substantial portion
of the service tax amounts have already been deposited and the same would
deserve to be given credit for, at the stage of pre-deposit. In his submission,
the Petitioner disputes the entire demand itself as composite works contracts
are not liable to service tax and are entitled for exemption. Reliance is also
placed upon the decision of the Supreme Court in VVF India Ltd. v. State of
Maharashtra, 2023 (72) G.S.T.L. 444 (S.C.), wherein the Supreme Court had
made an observation in the context of Section 26(6A) of the Maharashtra
Value Added Tax Act, 2002 which also requires certain pre-deposit.
According to the said decision, any amounts deposited prior to the filing of
the appeal would have to be given consideration for the purposes of pre-
deposit.
9. Ld. Counsel for the Petitioner further submits that even if the total
amount is taken, the Petitioner has already deposited almost 39% of the total
demanded amount which is much more than the pre-deposit.
10. On the other hand, ld. Counsel for the Respondent submits that the
amounts which were paid by the Petitioner in respect of the entire service tax
demand was on the basis of self-assessment. Therefore, the SCN related only
to the short-paid amount. In view of the same, the Petitioner has to pay pre-
deposit qua the short paid amount and no credit can be given for the earlier
deposited amount as the same is not even the subject matter of the SCN.
11. Heard. At this stage, the only question that needs to be determined is
whether the amount is to be taken as a whole or the same has to be considered
in a pre-SCN and a post-SCN situation. The SCNs relate to unpaid amounts
whereas the total demand was for the entire amount of service tax. The stand
of the Petitioner is clear that composite works contracts are not liable for
service tax and therefore, it is entitled to refund of even the amount which has
already been paid. The Department's case is obviously to the contrary.
12. This Court at this stage would not like to go into the question as to
whether the liability exists on the Petitioner to pay service tax or not. The only
thing that this Court has to consider is whether there is a shortage in the pre-
deposit and whether any waiver can be granted. The amounts which are in
dispute are as under:-
SCN Gross Tax Demand Deposited Short paid
SCN dated Rs. 8,35,86,570 Rs.3,62,78,541 Rs.4,28,08,029
07.03.2008 + Rs. 45,00,000
(Para 44.6 of Order = Rs.4,07,78,541
in- Original - page
162 of Vol-2)
SCN dated Rs.5,30,44,996 Rs.1,29,00,000 Rs.4,01,44,996
28.11.2008
Para 50 of Order-
in- Original - Page
176 of Vol-2)
Total Rs. 13,66,31,566 Rs. 5,36,78,541 Rs.8,29,53,025
(39.28% of Gross
Tax Demand)
13. A perusal of the above table would reveal that the total demand in this
case is to the tune of approximately Rs. 13.66 Crore. The Petitioner has
already deposited either through self-assessment or through other means
Rs.5.36 Crore, which is a substantial part of the entire demand itself.
14. Under such circumstances, the question as to whether the Petitioner is
entitled to exemption from payment of service tax is yet to be determined by
the CESTAT. Moreover, the appeal filed by the Petitioner is likely to be
rejected on the ground of non-payment of pre-deposit.
15. The total pre-deposit that is now demanded from the Petitioner is
approximately to the tune of Rs. 17 lakh which is a small sum compared to
what the Petitioner has already deposited i.e., Rs. 5.36 Crore.
16. Moreover, a Coordinate bench of this Court in decision of Mohammed
Akmam Uddin Ahmed & Ors. v. Commissioner Appeals Customs And
Central Excise & Ors., 2023:DHC:2846-DB, while discussing a number of
decisions held that the Court has the power to exercise discretion to waive
requirement of pre-deposit of penalty in rare and deserving cases. The relevant
portion of the said decision reads as under:
"19. The principle enunciated in the judgments of
Pioneer Corporation case (supra), Narender Yadav
case (supra), Shubh Impex case (supra), Manoj Jha
case (supra) and Ganesh Yadav case (supra) is that
the Court has the power to exercise discretion to waive
requirement of pre-deposit of penalty in "rare and
deserving cases‟ where a clear justification is made
out for interference. In Narendra Yadav case (supra),
this Court had found that the Order-in-Original did not
give any reasons for the penalty imposed on the
Petitioners and hence was unwarranted. In Shubh
Impex case (supra), the Court found that the condition
of pre-deposit would completely disable and paralyse
the business of the Appellant and given the financial
condition and background of the Appellant would
suffer financial breakdown and irreparable harm. The
Manoj Jha case (supra) held that since the Petitioner
has very limited means to deposit any amounts, the
relief to him is warranted."
17. Accordingly, the Petitioner is granted waiver of a sum of Rs.
17,21,477/-. The appeal of the Petitioner before CESTAT shall now be
adjudicated on merits and shall not be dismissed on the technical ground of
non-deposit of the balance pre-deposit amount.
18. The appeal of the Petitioner be listed before the CESTAT on 26 th
August, 2025.
19. A copy of this order be communicated to the CESTAT by the Registry.
20. The petition is disposed of in the aforesaid terms. Pending applications,
if any, are also disposed of.
PRATHIBA M. SINGH
JUDGE
RAJNEESH KUMAR GUPTA
JUDGE
JULY 14, 2025
kk/ck
