GST update /2026-27/0112

Rajasthan State Road Development & Construction Corporation Limited v. Commissioner of Central Goods and Service Tax, Jodhpur-I

GST UPDATE

Question before Hon’ble Court:

Whether the amount collected towards the cost of tender documents/application forms exigible to service tax?

Hon’ble Authority:	CESTAT, New Delhi
Case Title	Rajasthan State Road Development & Construction Corporation Limited v. Commissioner of Central Goods and Service Tax, Jodhpur-I
Appeal No. & Citation	Service Tax Appeal No. 50014 of 2020
Date of Order	13.10.2026
Outcome	Appeal Allowed

Brief Facts of the Case

During the course of audit of the records of the appellant, Rajasthan State Road Development & Construction Corporation Limited; the department observed that the appellant had collected amounts from its customers towards storage charges and tender fees but had not discharged the corresponding service tax liability. Accordingly, a show cause notice was issued demanding service tax along with interest and penalties. The adjudicating authority confirmed the demand in respect of tender fees collected by the appellant while dropping the demand relating to storage charges. The demand confirmed on tender fees was subsequently upheld by the Commissioner (Appeals). Accordingly, the appellant preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New Delhi.

Brief Arguments by Appellant

Tender Fees Represented Sale of Tender Documents and Not Consideration for Services

The appellant submitted that the Commissioner (Appeals) had erred in treating the tender fees as other income arising from Works Contract Services. The amount collected was actually towards the sale of tender documents/application forms and not towards the provision of any service. It was explained that the tender documents were printed materials or booklets containing details of the work, G-Schedule, formats of agreements, terms and conditions of the contract, dates and timings for opening and closing of bids and other essential particulars required by persons intending to participate in the bidding process. Accordingly, the activity undertaken by the appellant was in the nature of trading or sale of goods and could not be treated as the provision of a taxable service.

Activity of trading not subject to Service Tax

As trading of goods has been included in the negative list of services, it implies that Cenvat Credit of tax paid on input services used in trading of goods shall not be available.
Reliance was placed upon the following decisions:

Ace Caldery's Ltd. v. Commissioner of Central Excise, Bhopal, 2012 (5) TMI 62 – CESTAT, New Delhi.
Maliva Enterprises v. Commissioner of Central Excise, 2012 (5) TMI 601 – CESTAT, New Delhi.
Graphic Procede v. French Ministry of the Budget, Public Accounts and the Civil Service, (2012) 37 STT 719 (ECJ).
Sparekassernes Datacentre (SDC) v. Skatteministeriet, (2013) 39 STT 110 (ECJ).

No Element of Service Was Rendered to the Prospective Bidders

The appellant further submitted that it had not collected any service tax on the sale of tender documents/application forms because no service was being provided to the prospective bidders. The appellant merely supplied the tender documents containing the relevant particulars and conditions of the proposed work. Upon the sale of the tender documents, the title to the documents vested in the purchaser or prospective participant. Further, purchasing the tender documents did not make it mandatory for the prospective participant to actually participate in the bidding process. Thus, the amount collected could not be regarded as consideration for any service.

Brief Arguments by Respondent

Activity Covered Under the Definition of Service

The Department supported the conclusion of the Commissioner (Appeals) that the activity undertaken by the appellant was covered within the definition of service under Section 65B(44) of the Finance Act, 1994. Accordingly, the amount collected towards tender fees was liable to service tax.

Suppression of Material Facts

The Department also held that the appellant had suppressed material facts from the department regarding the rendering of services and the receipt of amounts towards tender fees.

Findings and Judgement

Service Tax Requires Provision of a Taxable Service for Consideration

The Tribunal observed that service tax is required to be paid on a taxable service and for the provision of such service by one person to another, against consideration. Thus, the existence of consideration alone was not sufficient to attract service tax. The amount must have been received towards the provision of an identifiable taxable service. In the present case, the Tribunal noted that the amount collected by the appellant was only the prescribed cost of tender documents. Accordingly, the transaction could be viewed as a sale/supply of documents rather than the provision of a taxable service.

Tender Is Merely an Invitation to Offer and Does Not Create a Contractual Service Arrangement

The Tribunal observed that a tender is ordinarily only an invitation to offer and does not, by itself, create a contractual service arrangement with every bidder. The mere purchase of tender documents does not establish the existence of a service arrangement between the tendering authority and the prospective bidder. Consequently, the collection of tender fees could not be treated as consideration for the provision of a taxable service.

Reliance placed on the Judicial precedents

The Tribunal drew support from its earlier decision in M/s Rajcomp Info Services Limited v. Principal Commissioner of CGST & Central Excise, Jaipur, Final Order No. 50209 of 2026 dated 03.02.2026. In the said decision, the Tribunal had examined the taxability of tender fees collected towards providing tender documents and observed that the department had failed to establish any contractual arrangement between the appellant and the bidder in relation to the payment of tender fees.The Tribunal had further observed that since a tender is merely an invitation to the bidder, the fee collected towards providing tender documents could not have any element of service.It was also observed that there was no quid pro quo in receiving the tender fees. The activity of providing tender documents to bidders was considered equivalent to the sale of documents and not the provision of any service.The Tribunal also referred to Department Circular No. 192/02/2016-ST dated 13.04.2016, observing that services provided by the Government or a local authority in lieu of charges would be taxable only where the payment was made for obtaining a service in return. Reliance was also placed on the decision of M/s Ajmer Vidyut Vitaran Nigam Ltd. Vs. Principal Commissioner of CGST & Central Excise, Jaipur 2024 (11) TMI 1445-CESTAT New Delhi.”
In view of the above findings, the Tribunal concluded that the amount collected towards tender documents could not be subjected to service tax, as the transaction represented the sale of documents and did not involve the provision of an identifiable taxable service.

CA Pradeep Jain_

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GST update /2026-27/0112

GST UPDATE

Question before Hon’ble Court:

Brief Facts of the Case

Brief Arguments by Appellant

Brief Arguments by Respondent

Findings and Judgement

Opinion

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