Railway project exemption under service tax law upheld for construction-related services, with no public-private distinction

Service tax was held inapplicable to services relating to a railway project because the exemption for railway-related works under Notification No. 25/2012-Service Tax was construed broadly. The Tribunal applied its earlier ruling in the assessee's own case and held that the exemption is not confined to railways for public use; no artificial distinction can be drawn between public and private railway projects for denying relief. As the services related to construction or execution of railway infrastructure, the exemption applied and the tax demand could not survive.

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Issues: Whether service tax was leviable on services relating to a railway project, in view of the exemption for railway-related works under Notification No. 25/2012-Service Tax dated 20.06.2012.

Analysis: The appeal turned on the applicability of the railway exemption. The Tribunal followed its earlier decision in the assessee's own case and held that the exemption available to railways is not confined to railways for public use; no artificial distinction can be drawn between public and private railway projects for denying the exemption. Since the service related to construction or execution of railway infrastructure, the exemption notification was held applicable and the tax demand could not survive.

Conclusion: Service tax was not leviable on the railway project, and the impugned order was unsustainable.

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