DGCEI can investigate PAN India service-tax matters despite assessee’s registration with multiple Commissionerates

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Facts: M/s. National Building Construction corporation ltd (“the assessee”) was engaged in carrying out civil work and construction for various departments of Government and PSUs all over India and had not opted for centralized registration for the purpose of service tax. On the course of audit in one of the assessee’s unit at Greater Noida by Additional Commissioner (Audit) for the period April 2010 to March 2013.The audit report stated about assessee’s failure to pay service tax on Project Management Consultancy Charge (PMC charge) also known as Agency charges or NBCC charges. The report observed that PMC charges including mobilization advance were not exempt from service tax under the Exemption Notification No. 25/12-ST which was restricted to contract services for construction of government buildings.

Further the assessee has filed writ petition challenging the letter dated December 03,2015 issued by Director General of Central Excise Intelligence (DGCEI) informing assessee about the permission granted to Additional Director General, DGCEI Lucknow Unit to investigate the service tax evasion cases of all the branches of the assessee.

Assesses Interpretation of law: The assessee argued that PMC charges were exempt under Notification 25/12-ST as they were part and parcel of construction services undertaken for government, governmental authority, local authority and were bundled services as per Section 66F(3) of Finance Act, 1994. The assessee stated that Chapter V of Finance Act does not permit centralized enquiry and investigation except where search was conducted or arrest had been made as per Section 90 of Finance Act. Further, assessee also stated that Section 14 of Central Excise Act states that summons could be issued only at time of enquiry. Further, the assessee stated that Rule 5A(1) of Service Tax Rules ,1994 permits an officer to access any premises registered under the rules for scrutiny, verification and check and that Special Audit can be directed u/s 72A of the Finance Act.

Held: The Hon’ble High Court of Delhi in the case of National Building Construction Corporation Ltd Vs Union of India dated November 16, 2018 held that the writ petition is dismissed and holds that Central Excise Officers of DGCEI can have PAN India jurisdiction and issue notices to investigate service tax cases against assessee/person even if person is registered with one or multiple Commissionerate’s. Further  the Board has wide discretion in power while fixing local limit assigned to Central Excise Officer and authorize centralised or pan India investigations which may indeed be desirable/necessary to curtail delay, facilitate complete and detailed investigation at one location rather than multiple investigations and enquiries which would be overlapping.

HC further added that “Multiple enquiries would be inconvenient and cause harassment to many-a-assessee specially when similar or identical issues are involved. A pragmatic and practical approach is required in matters of procedure”. HC referred to case of Duncan Agro Industries Ltd. Therefore, HC held that, Central Excise Officers of DGCEI have all India jurisdiction and can issue notices and enquire into the matters relating to service tax against any assessee/ person even if the said person or assessee is registered with one or multiple Commissionerate’s. Consequently, HC dismissed assessee’s writ petition while leaving open the issue of chargeability of service tax on PMC charge.

Citation: TS-685-HC-2018(DEL)-ST