TaxTMI 
TaxTMI 
2019 (5) TMI 376
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....was also made under section 73A for failure to deposit the amount collected as service tax by the appellants. After due process of law, the original authority confirmed the demand of service tax to the tune of Rs. 13,98,18,576/- along with interest and imposed penalties of Rs. 2,000/-, Rs. 18,000/- and Rs. 5,000/- under sections 70, 76 & 77 of the Finance Act, 1994 and equal penalty of Rs. 13,98,18,576/- under section 78 of the Finance Act, 1994. Further, the payment of Rs. 3,88,63,535/- being the amount collected as service tax by appellants and not deposited with the Government was also confirmed under section 73A of the Finance Act, 1994, along with interest. Aggrieved by such order, the appellants are now before the Tribunal. 2. On behalf of the appellants, Ld. Counsel Shri B. Venugopal appeared and argued the matter. He made oral and written submissions, which can be summarised as under: (a) The demand with respect to various services and the period involved as tabulated by the Counsel for the appellant is as under: Sl. No. Description of service Demand of Service Tax (Rs.) Period involved 1 Commercial or Industrial Construction Service- Section 65(25b) of the Fina....
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....vil Contractors as reported in [2019(20)G.S.T.L. 66 (Tri.-Del.)]. He therefore argued that the demand of service tax under the category of Commercial or Industrial Construction Service as well as Works Contract Service for construction of railway sidings/tracks for the period October 2004 to June 2007 as well as August 2007 to October 2009 cannot sustain. It is also argued by the Ld. Counsel that for the period prior to 01.06.2007 being composite contracts, the case of Larsen & Toubro Limited as reported in [2015(39)S.T.R 913 (SC) would be applicable and that demand cannot sustain for this reason also. (d) With regard to Consulting Engineering Service, he submitted that the said services were provided in relation to the construction of railway siding. That the appellant was under the bonafide belief that Consulting Engineering Services provided in relation to the construction of railway siding is not taxable and accordingly service tax was not paid. However, due to the confusion, in some cases the appellant collected service tax to the extent of Rs. 92,45,529/- from their customers but had not remitted the same to the Government. Later, during the course of investigation, when t....
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....at the appellant has not provided any service on behalf of the client and therefore the allegation that the activity of supervision for site formation, earth work etc. would not fall under Business Auxiliary Services. The show cause notice does not specify under which limb of the definition the demand of service tax has been proposed. The adjudicating authority has classified the service of supervision carried out by the appellant as falling under the limb of 'Customer Care Service on behalf of the client'. At no stretch of imagination, the supervision service provided by the appellant can be termed as Customer Care on behalf of the client. The activity carried out by the appellant will not fall under the definition of Business Auxiliary Service and therefore the demand cannot sustain. (h) With regard to the demand in Sl.No. 7 of the above table, the Ld. Counsel submitted that the appellant had collected Rs. 3,88,63,535/- as service tax for various services, the details furnished by the Ld. Counsel as per the table are given below: Description of Service Service Tax collected (Rs.) Consultancy Services : 92,45,529 Repairs & Maintenance Services : 3,21,006 C....
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....re constructed for public carriage of passengers or goods. In the present case, the railway sidings constructed by the appellants are used for carriage of goods of private parties and therefore the exclusion/exemption of service tax is not available. He relied upon the decision of the Tribunal in the case of Mukesh Kalway vs. Commissioner of Central Excise, Bhopal [2017(3) TMI 615 - CESTAT New Delhi)] to argue the point that in the said case cleaning service provided to railways was held to be taxable. Only when railways are used for public purpose, the activities of construction of railway sidings can be excluded from the purview of levy of service tax. The demand confirmed therefore is legal and proper. 4. With regard to the Consulting Engineering Service, he submitted that the said activities provided by the appellant are subject to levy of service tax and cannot be excluded merely for the reason that it is related to construction of railways. The exclusion contained in Commercial or Industrial Construction Service or Works Contract Service cannot be applied to the Consulting Engineering Services to claim the exemption from service tax. 5. The demand confirmed in Maintenance....
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....tion" means - (b) (a) construction of a new building or a civil structure or a part thereof; or (c) (b) construction of pipeline or conduit; or (d) (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (e) (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is - (f) (i) used, or to be used, primarily for; or (g) (ii) occupied, or to be occupied, primarily with; or (h) (iii) engaged, or to be engaged, primarily in, (i) commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams; Section 65(105)(zzzza) of the Finance Act, 1994 "Taxable Service" means any service provided or to be provided to any person, by any other person in relation to the execution of....
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....e airports, railways, bridges, tunnels owned by government are excluded. The private Railway siding/track so constructed has to be connected to the Railways to facilitate the transport of goods. These railway sidings also then are under the supervision and control of Railways. In the procedures for liberalization of Siding Rules dated 31.03.2005 issued by Ministry of Railways, para 4.5 mentions about cost of Railway staff. It is stated therein that in all private sidings other than Engine on Load only, barring the cost of one commercial staff per shift, Railways will bear the cost of all other Railway staff. The cost of all staff at engine on Load (EOL) sidings will be borne by the Railways. Detailed instructions are issued for the construction, maintenance, supervision and use of these railway sidings. 12. The issue whether the construction activities of railway sidings/tracks for non governmental railway or private railway is subject to service tax has been analysed by the Tribunal in the case of Afcons Infrastructure Limited (supra). In paras 5.1 to 5.4, the Tribunal observed as under: "5.1. The definition of Commercial and Industrial Construction Service as provided in Sec....
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....all as such constructions in respect of Railways stands excluded from the scope of the levy. Similar issue was discussed by the Tribunal in the case of SMS Infrastructure Limited (supra) which reads as under: "Learned Authorised Representative places reliance on the decision of this Tribunal in AB Projects Pvt. Ltd. v. Commissioner of Central Excise, Nagpur [2010 (19) S.T.R. 886 (Tri-Mumbai)] to contend that any activity of construction that is able to generate revenue will not be exempt from levy of service tax. We take note of the specific exclusion of railway work from the definition (supra). Revenue contends that the exemption is accorded to railways that are used as public carriage of passengers and goods which the projects undertaken by the appellant are not. Appellant relies upon the decision of the Tribunal in Afcons Infrastructure Ltd. v. Commissioner of Central Excise Mumbai-II [2015 (38) S.T.R. 194 (Tri.- Mumbai)] and Delhi Metro Rail Corporation Limited v. Municipal Corporation of Delhi and Others [2008 (103) DRJ 369] to drive home the point that coverage under Railways Act, 1989 is sufficient to consider any such infrastructure as railways. We notice that the Rail....
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....se of M/s. IRCON International Ltd. v. C.S.T. Delhi, 2017 (4) T.M.I. 1086 (Tri.-Del.) [IRCON is one of the company constituting the joint venture i.e. the appellant] has held a composite work contracts irrespective include the category of service of erection, commissioning and installation irrespective that the said service is taxable since 1-7-2003 but since the services rendered is classified as works contract and the work contract in respect of railways is excluded from the tax liability as per the statutory definition itself, no question of levy of any service tax on such contract arises. It was also clarified that it is a well settled legal position that metro work is nothing but railways work." 14. In the above decisions, the Tribunal has held that Section 65(25b) or Section 65(105)(zzzza) of the Finance Act, 1994 does not use the word 'railways' for public carriage or that the railways should be government railways. The definition uses the words "railways" only. Therefore, the execution cannot be restricted to the government railways which are used for public transport of passengers or goods. The Ld. AR has relied upon the decision in the case of M/s Mukesh Kalway vs. CCE ....
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....ads, airports, railways, transport terminals, bridges, tunnels, dams, ports or other ports, from the whole of service tax leviable thereon under section 66 of the said Finance Act. 2. This notification shall come into force on the 16th day of June, 2005." 18. The said notification exempts Site Formation and clearance, excavation and demolition and such other similar activities carried out in the course of construction of roads, Airports, Railways etc. from the levy of service tax. This notification has come into force on 16th June, 2005. The demand, therefore, for this activity cannot sustain and needs to be set aside which we hereby do so. 19. The appellant had received amounts for supervision activities carried out for various companies like Madras Cement Ltd., ACC Limited etc. A demand of Rs. 5,16,672/- has been confirmed under Business Auxiliary Service alleging that the charges received for supervision activities carried out by the appellant would fall under the definition of Business Auxiliary Services. For better appreciation, the definition of 'Business Auxiliary Services" as it stood during the relevant period is as under: "Business Auxiliary Service" means any s....
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....ices under Commercial or Industrial Construction Service and Works Contract Service as well as Site Formation Service. He pointed out that as per Section 73B, interest has to be paid on the amount collected in cases where tax is determined under sub section (4) of Section 73A. We have already held that no service tax is payable under Commercial or Industrial Construction Service, Works Contract Service and Site Formation Services. The amounts collected under the category of Commercial or Industrial Construction Service/Works Contract Service and Site Formation service would then fall under sub clause (2) of Section 73A which reads as under: "Section 73A - sub clause (2) "Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government." 22. Section 73B does not provide for demand of interest in case of any amount collected which is not required to be collected as service tax from any other person as provided in sub clause (2) of Section 73B. The Tribunal in the case of Indu Eastern Province Proje....