The Orissa High Court has set aside a service tax demand imposed on Jharkhand-based construction company citing lack of proper inquiry and violation of principles of natural justice.
The bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman found serious procedural lapses in the adjudication process.
The case arose from a writ petition filed by the company challenging an adjudication order dated July 4, 2024, issued by the GST and Central Excise authorities in Rourkela. The order had confirmed service tax liabilities for the financial years 2015–16 and 2016–17 under the Finance Act, 1994.
The petitioner argued that it had not carried out any work in Odisha prior to the introduction of GST in 2017 and that its services were exempt under the Mega Exemption Notification of 2012. The company maintained that all its projects during the relevant period were executed in Bihar and Jharkhand.
The Court noted that the tax authorities relied primarily on data from the Income Tax Department without conducting an independent verification. There was no clear determination of whether the alleged taxable services were actually performed within Odisha. The petitioner was not given adequate opportunity to present evidence or defend its case.
The bench held that such an approach rendered the findings “perverse” and legally unsustainable.
A key aspect of the case involved the possibility of double taxation. The Court took note of a separate order by the Principal Commissioner in Ranchi, which had already dropped similar tax demands for overlapping periods.
Additionally, the Customs, Excise and Service Tax Appellate Tribunal had earlier ruled in favor of the company for part of the disputed period, citing limitation grounds.
The Court emphasized that proper opportunity to be heard is a fundamental requirement in tax proceedings. It referred to the Supreme Court’s ruling in Tin Box Co. vs CIT, reiterating that an assessment order must be passed only after giving the assessee a fair chance to present their case.
Setting aside both the adjudication order and the subsequent rejection of rectification, the Court directed a fresh adjudication by the tax authority; grant of adequate opportunity to the petitioner to submit documents and evidence; completion of the entire process within six weeks; and appearance of the petitioner before authorities by April 6, 2026
The Court also allowed the company to raise all relevant legal grounds, including exemption eligibility, limitation, and double taxation concerns.
Case Details
Case Title: M/s. Saryug Gautam Construction Private Limited Versus The Commissioner
Citation: JURISHOUR-402-HC-2026(ORI)
Case No.: W.P.(C) No.20382 of 2025
Date: 16.03.2026
Counsel For Petitioner: Nitin Kumar Pasari
Counsel For Respondent: Bismaya Ananda Prusty, Senior Standing Counsel
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