TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Exemption for railway construction services under Notification No.17/2005 confirmed; private railway sidings exempt from service tax.</h1> Notification No.17/2005 exempts services of site formation, excavation, earth moving, demolition and allied activities when rendered in the course of ... Exemption under Notification No. 17/2005-S.T. - construction of railways - no distinction between public and private railways for the purpose of the notification - interpretation of fiscal statute / strict compliance with exemption notification - Whether services of site formation, excavation and allied works rendered in the course of construction of railway sidings for private/commercial entities fall within the exemption granted by Notification No.17/2005 and are not liable to service tax. - HELD THAT:- It is a settled position of law that while interpreting a fiscal statute, the same has to be read in its plain and unambiguous terms, and neither addition of words nor omission of words in the statutory text is permissible. It is equally well settled that, in order to claim the benefit of an exemption notification, strict compliance with the conditions stipulated therein is required. On a plain reading of Notification No. 17/2005, it is unambiguously clear that the Central Government has exempted services such as site formation and clearance, excavation and earth moving, demolition, and other similar activities, when provided to any person by any other person in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams, ports and other infrastructure projects, from the whole of service tax leviable thereon under Section 66 of the Finance Act. The notification thus grants exemption to services rendered in connection with a host of infrastructure projects from the levy of service tax.\ It is also relevant to note that at the time of issuance of the notification, it was within the knowledge of the authorities that railway lines are also laid for commercial purposes. Despite such knowledge, no distinction was made in the notification. The intention of the Central Government, as can be gathered from the plain language employed, was to grant exemption to services rendered in relation to infrastructure, in the present case, railways. Therefore, so long as the services are provided in relation to the construction of railways, the notification exempts such services from the whole of service tax leviable thereon. The interpretation adopted by the Commissioner amounts to reading words into the notification, which is impermissible in law. The Tribunal, by following the decision of the CESTAT, Mumbai Bench, involving an identical nature of work and the very same notification, has rightly held that service tax is not payable on the construction of private railway sidings. Having regard to the object of issuing the notification, which is to encourage the construction of various infrastructure projects, one such being railways, any distinction between railways meant for public carriage of passengers or goods and those laid for commercial use is impermissible. Thus, we find no reason to differ from the findings recorded by the CESTAT. The substantial questions of law are answered in favour of the assessee and against the Revenue. Accordingly, the appeal filed by the Revenue stands dismissed. Issues: (i) Whether the activities of the assessee fall within the definition of 'work in relation to Railway' and are exempt under Notification No. 17/2005-S.T. dated 07.06.2005; (ii) Whether a railway line laid incidentally to commercial transactions can be classified as an exempted service under Notification No. 17/2005-S.T. dated 07.06.2005; (iii) Whether the definition of 'railway' under Section 2(31) of the Railways Act, 1989 excludes private railway lines laid by private entities so as to deny exemption under Notification No. 17/2005-S.T. dated 07.06.2005.Issue (i): Whether the activities of the assessee fall within the definition of 'work in relation to Railway' and are exempt under Notification No. 17/2005-S.T. dated 07.06.2005.Analysis: Notification No. 17/2005 exempts site formation, excavation and similar activities when provided 'in the course of construction of' specified infrastructure including 'railways'. The notification's language contains no distinction between government-owned/public railways and privately constructed/commercial railways. Interpretation of fiscal exemption must be by plain and unambiguous reading; exemptions require strict compliance with conditions expressly stated. The Tribunal's finding that construction of private railway sidings falls within the scope of the notification aligns with the notification's text and precedents relied upon.Conclusion: The activities of the assessee qualify as works in relation to railways and are exempt under Notification No. 17/2005-S.T. dated 07.06.2005. The conclusion is in favour of the assessee.Issue (ii): Whether a railway line laid incidentally to commercial transactions can be classified as an exempted service under Notification No. 17/2005-S.T. dated 07.06.2005.Analysis: The notification emphasises creation of infrastructure and does not condition exemption on public carriage or non-commercial purpose. The fact that a railway line is laid for commercial use does not remove it from the class of infrastructure specified. No express exclusion for commercially used or privately owned railways exists in the notification; introducing such an exclusion would amount to reading words into the notification.Conclusion: A railway line laid for commercial purposes remains within the scope of the exemption under Notification No. 17/2005-S.T. dated 07.06.2005. The conclusion is in favour of the assessee.Issue (iii): Whether the definition of 'railway' under Section 2(31) of the Railways Act, 1989 excludes private railway lines laid by private entities from the notification's scope.Analysis: Section 2(31) of the Railways Act defines 'railway' as a railway for the public carriage of passengers or goods and includes lands appurtenant to a railway; Section 2(20) defines 'Government railway' separately. The notification, issued under the Finance Act, does not adopt or incorporate the Railway Act's ownership distinctions to limit its scope. Where the notification's plain language does not carve out private railways, ownership-based exclusions cannot be read into the exemption.Conclusion: The definition in Section 2(31) of the Railways Act, 1989 does not operate to exclude privately laid railway lines from the coverage of Notification No. 17/2005-S.T. dated 07.06.2005. The conclusion is in favour of the assessee.Final Conclusion: The substantial questions of law are answered in favour of the assessee and against the Revenue; the Tribunal's conclusion that service tax is not payable on the construction of private railway sidings is upheld.Ratio Decidendi: Where an exemption notification plainly grants relief for services 'in the course of construction of' specified infrastructure and contains no express exclusions, the notification extends to such services irrespective of ownership or commercial purpose; courts must apply the notification's plain language and cannot read in limitations absent express wording.
TaxTMI 
TaxTMI 
