You need to be more detailed. First make sure the server is vanilla, second make sure when you entered the command into the block you were an op in creative mode. If the server isn't vanilla then you shouldn't post here. I know bukkit's command blocks are broken but when my server was vanilla before bukkit command blocks worked fine.
Grass only spreads onto dirt blocks. Dirt doesn't turn into grass. So if you grass somewhere underground you have to connect it to grass above ground and wait for it to spread.
Is Modded: Very likely
What mods do you have installed? It is probably one of the mods causing the issue.