2026 (2) TMI 1342 - AT - Service Tax

Exemption for Railway Original Works denied where service is repair; extended limitation upheld for suppression of facts.

Entry No. 14 exemption covers construction, erection, commissioning or installation of original works for railways; after amendment it excludes metro ... Liability to pay service tax being eligible for exemption under Mega Notification No. 25/2012 dated 20.06.2012, the Entry no. 14 thereof. - construction, erection, commissioning or installation of original work - explanation to Entry No.14 concerning monorail and metro - eligibility condition of contracts entered into before 01.03.2016 with payment of appropriate stamp duty - nature of service-repair and maintenance versus works/installation - extended period of limitation invoked for suppression/mis-declaration - HELD THAT:- It is observed that the appellant is solely relying upon the Notification No. 2010/E&R/1500/2019 dated 28.12.2010 issued under Section 3 of Railways Act, 1989 to impress upon that vide the said notification Kolkata Metro has been declared to be railways w.e.f. 29.12.2010. However, it is not the only criteria to check eligibility for exemption in question. The foremost requirement for the said exemption is a nature of service rendered. It is also observed that the copy of said tender document was being asked from the appellant since the stage of issuance of show cause notice but the same was never provided by the appellant. The perusal of all the documents on record falsify appellant submissions. Appellant has absolutely fail to fulfill the eligibility criteria prescribed under Entry 14 of Mega Exemption Notification No. 25/2012 dated 20.06.2012. The case of appellant is also not covered under the explanation to the said entry.​​​​​​​ The services are being provided to Kokata metro. Metro has specifically been excluded from the purview of exemption available to Railways. There is no ambiguity in the language of amended entry no. 14. Notification of 2010 as relied upon by the appellants despite being prior in time finds no mention in the Notification No. 9/2016 which amended the entry no. 14. Hence it is held that the said notification also does not extend any benefit to the appellant. In totality of these observations, it is held that appellant has rightly been denied the exemption benefit of mega exemption notification, amended entry no. 14 thereof. Extended period of limitation invoked for suppression/mis-declaration - There is also no mention for availment of exemption benefit of Entry No. 14 of Notification 25 of 2012. Availment of exemption benefit without mentioning and declaring the same to the department is definite act of suppression of facts. The only motive for such act is the evasion of tax. Hence, no error to have been committed by the department when the show cause notice was issued invoking extended period of limitation. Thus, hold that show cause notice is not barred by time. The above framed both the issues stands accordingly decided against the appellant an in the favarour of Revenue. Resultantly, the order under challenge is hereby upheld and present appeal is ordered to be dismissed. Issues: (i) Whether the appellant was entitled to exemption under Entry No. 14 of Mega Exemption Notification No. 25/2012-ST (as amended by Notification No. 9/2016-ST) for services provided to Kolkata Metro; (ii) Whether the extended period of limitation could be invoked for issuance of the show cause notice.Issue (i): Whether the appellant was entitled to exemption under Entry No. 14 of Mega Exemption Notification No. 25/2012-ST (as amended by Notification No. 9/2016-ST) for services provided to Kolkata Metro.Analysis: Entry No. 14 exempts services by way of construction, erection, commissioning or installation of original work pertaining to railways; the post-amendment text excludes monorail and metro unless contracts were entered into before 01.03.2016 with appropriate stamp duty paid. The appellant's records, tender, letter of acceptance and invoices identify the activity as repair and maintenance (repairing of relays), not construction, erection, commissioning or installation of original work. The appellant failed to produce the tender documents at the show cause stage and did not demonstrate payment of stamp duty on the contract dated prior to 01.03.2016. A Ministry of Railways notification declaring Kolkata Metro part of railways does not satisfy the Entry's substantive eligibility criteria where the nature of service is not within the exempted categories and the amended entry expressly excludes metro except under the stated condition.Conclusion: Exemption under Entry No. 14 of Notification No. 25/2012-ST (as amended by Notification No. 9/2016-ST) is not available to the appellant; the appellant's services are repair and maintenance and do not qualify for the exemption and the conditional exception for metro was not satisfied.Issue (ii): Whether the extended period of limitation could be invoked for issuance of the show cause notice.Analysis: The appellant filed service tax returns but did not disclose the repair and maintenance services or claim the exemption in those returns. Non-disclosure of the nature of service and failure to declare the exemption prevented departmental detection until audit; such non-disclosure amounts to suppression of material facts. In these circumstances the proviso to Section 73(1) of the Finance Act, 1994 permitting extended period was properly invoked.Conclusion: The extended period of limitation was correctly invoked; the show cause notice is not time-barred.Final Conclusion: Both issues are decided against the appellant; the denial of exemption and the invocation of extended limitation are upheld and the appeal is dismissed.Ratio Decidendi: Exemption under Entry No. 14 of Notification No. 25/2012-ST (post amendment by Notification No. 9/2016-ST) applies only to services that are construction, erection, commissioning or installation of original works pertaining to railways and, post amendment, excludes metro unless contracts were entered into before 01.03.2016 with appropriate stamp duty paid; repair and maintenance services do not qualify for this exemption, and suppression of the true nature of services in returns justifies invocation of the extended period under Section 73(1) of the Finance Act, 1994.