In a petition filed before the Supreme Court against the final judgment and order dated 19-11-2025, passed by the Telangana High Court, whereby the petitioner’s challenge to a series of ex parte service tax proceedings on the grounds of delay in filing the statutory appeal, a bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan issued notice to the respondents.
The petitioner, a small civil contractor, executed multiple public utility projects for State Departments from April 2015 to June 2017. The petitioner believed that the execution of civil works for the government constituted exempted works contracts, under which VAT was deducted at source and service tax was neither payable nor recoverable. Thereafter, proceedings were initiated based on turnover figures reflected in the Income Tax Returns (ITR), without verification of work orders, valuation, exemptions, or the service component of the composite contracts.
A show-cause notice dated 28-12-2020 was issued wherein Rs. 72,20,229/- was demanded when the petitioner was inflicted with COVID-19 and post-infection complications. Due to his limited knowledge, the petitioner entrusted the matter to his consultant. Notices of personal hearing were returned unserved, and an ex parte order dated 25-02-2022 was passed mechanically, confirming the demand without affording the petitioner an effective opportunity of hearing.
The consultant who had custody of the records collected the order and assured the petitioner that representations had been made and that the matter would be resolved. In July 2022, the consultant fell critically ill, remained bedridden, and passed away on 01-10-2024 without providing the records, correspondence, and working papers of the case to the petitioner. He remained unaware of the adverse orders till June 2024, when coercive recovery proceedings were suddenly initiated behind his back. His bank accounts were frozen, government receivables were intercepted, and payments for completed works were withheld, thereby paralyzing the petitioner’s business.
The petitioner approached the High Court but withdrew the writ petition and undertook the task of reconstructing records scattered across two States. Ultimately, multiple departments issued written confirmations that no service tax was payable or deducted under the contracts executed by the petitioner. Thereafter, the petitioner filed a statutory appeal in May 2025 along with the mandatory 7.5% pre-deposit, but the appeal was rejected on the grounds of limitation.
The Court stated that the point for consideration in the present matter was whether Section 5 of the Limitation Act, 1963 would apply for the purpose of condoning delay insofar as Section 85(3A) of the Finance Act, 1994 is concerned.
After noting the petitioner’s reliance on Commissioner of Customs & Central Excise v. Hongo India Private Limited & Anr. (2009) 5 SCC 791, and Union of India v. Popular Construction Co. (2001) 8 SCC 470, the Court issued notice returnable in four weeks and granted liberty to serve the Standing Counsel for the Union of India.
Appearances:
For Petitioner – Mr. K. Parameshwar (Sr. Adv.), Mr. Sandeep Singh (AOR), Mr. Tadimalla Bhasker Gowtham, Mr. M. Parameswara Reddy, Mr. M. Chandrakanth Reddy, Mr. Prasad Hegde, Mr. N. Sai Kaushal, Ms. Veda Singh, Ms. Aditi Garg, Mr. Vallari Km, Mr. Godavari V Durga Prasad, Ms. Shambhavi Shiva
For Respondents – None
