AI Drafter 
TaxTMI 
TaxTMI 
2018 (8) TMI 1228
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....l and the same being transported through network of railways. So the appellant entered into an agreement for procurement of coal from South East Central Coalfields Limited, Chhattisgarh. The coal was to be transported through railway upto the plant of the appellant. However, as the last station was Sarai Banjara railway station in Punjab, which is located at considerable distance from the Power Plant and there was no direct linkage up to the power plant, the appellant was required to construct siding for transportation of coal from Sarai Banjara railway station to Thermal Power Plant. As the construction of siding involved various alterations and modification to the existing Sarai Banjara railway station and such construction could not have been undertaken without the mandatory approvals, permits and supervision of the Railways. Therefore, the appellant constructed the siding under the mandatory supervision of Railways. For that activity, the appellant is required to make payment to the Railways in relation to approval and supervision provided by the railways. An enquiry was conducted by the Revenue with regard to various payments made to Indian Railways in relation to mandatory su....
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....bmission of the appellant that the total amount paid by the appellant to Railways was Rs. 29,92,50,000/- and out of which Rs. 17,35,14,200/- has been made during the impugned period. Therefore, he prayed that the impugned order is to be set-aside. 4. On the other hand, ld. AR opposed the contention of the ld. Counsel on the ground that construction or supervision of private railway sidings like the subject one is not a statutory function of the Indian Railways. The Departmental/ Codal charges are collected on the basis of their being provided for in the Engineering Code. Code 1137 specifies that when a work is undertaken by the engineering department of the Railways for outside parties, departmental charges should be levied to cover the cost of tools and plant and of establishment supervision and prescribe the rates thereof which are as mentioned in the Freight Marketing Circular No. 1 of 2012. Therefore, the charges are not as per any statute but are based on letters issued by the Railway Board and empower an officer of the Railways to remit them in certain circumstances. He also relied on the decision of Hon'ble High Court of Delhi in Writ Petition (Civil) 993/2012 and CM ....
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....efore sanction is given by the Central Government. (3) The Central Government, after considering the report of the Commissioner, may sanction the opening of a railway under Section 21 as such or subject to such conditions as may be considered necessary by it for the safety of the public. 23. Sections 21 and 22 to apply to the opening of certain works. - The provisions of Section 21 and 22 shall apply to the opening of the following works if they form part of, or are directly connected with, a railway used for the public carriage of passengers and have been constructed subsequent to the giving of a report by the Commissioner under Section 22, namely:- (a) opening of additional lines of railway and deviation lines; (b) opening of stations, junctions and level crossings; (c) re-modelling of yards and re-building of bridges; (d) introduction of electric traction; and (e) any alteration or reconstruction materially affecting the structural character of any work to which the provisions of sections 21 and 22 apply or are extended by this Section. " On going through the above provisions, we find that Railways includes siding....
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....icability for the Deposit Works, as to be executed by Railways, by the Party under Railway's supervision or by the party through Railway's Approved Consultants respectively as per following table:- SL Purpose Execution by Charges 1. Departmental charges: (Inclusive of cost of tools & plant and establishment supervision) Railway 12 ½% % of cost of project excluding cost of OHE and S&T Works Party 6¼% Approved Consultant 4% 2. Departmental charges for OHE and S&T Works (Inclusive of cost of tools & plant and establishment supervision) Railway 12 ½% % of cost of OHE and S&T Works for Railway's mandatory supervision Party 6¼% Approved Consultant 6¼% 3. D&G Charges: (For work charged establishment and other than establishment supervision) Railway As per actual, if any [Ref: para-1829E] Party Approved Consultant As per the said Circular, for construction of railway siding, mandatory deposits have to be made by the appellant as per the chart extracted in Para 3 of the above policy Circula....
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.... or outside the precincts of a port or an airport; (iii) transport of goods or passengers; or (iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities; ...... ...... ..... " The "support services" are defined in Section 65B of the Act, which states as under:- " 65B. Interpretations : In this Chapter, unless the context otherwise requires, - (1) "actionable claim" shall have the meaning assigned to it in Section 3 of the Transfer of Property Act, 1882; ..... (49) " support services" means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis;" Admittedly, as per Section 65B (49) of Finance Act, 1994, the approvals and supervision done by the Railways cannot be done by any other party or the appellant. We furth....
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....and directly deposited with the Government Revenue qualify to be outside the levy of service tax. Admittedly, at the time of adjudication, the appellant could not produce any certificate to say that the amount paid by the appellant is paid to the Railways has gone to consolidated fund of India but during the course of arguments, the appellant produced letter dated 27.09.2016 which is reproduced as under:- The above letter clearly shows that the said amount has been credited in the consolidated fund of Government of India and therefore, we hold that activity undertaken by the Railways for granting various approvals and supervision for siding constructed by the appellant are of statutory in nature and is sovereign function of the Railways. Therefore, on that account, the appellant is not liable to pay service tax. 10. We further take note of the fact that as per Notification No. 25/2012-ST dated 20.06.2012, Serial No. 14A, the services by way of construction, erection, commissioning or installation of original works pertaining to railways are exempt from payment of service tax. The term railway includes siding and yard. Therefore, on that account also, the granting of....