TaxTMI 
TaxTMI 
2024 (10) TMI 1400
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....2014-15, the appellant had received an amount of Rs. 30,37,46,966/- from M/s BSNL (BBNL) on account of providing services of laying of cable, under or alongside road, under NOFN project. However, this amount was neither shown by the appellant in their ST-3 returns nor had any service tax been paid by them on such services provided by them to M/s BSNL (BBNL). The appellant vide their letter dated 29.10.2015 had submitted that neither had they collected nor received any service tax from BSNL (BBNL) on account of providing service of laying of cable, under or alongside road, under NOFN project nor they deposited any service tax on NOFN project. Accordingly, a show cause notice dated 04.05.2016 was issued to the appellant proposing demand of service tax amounting to Rs. 3,75,43,175/- and the same was adjudicated vide Order-in-Original dated 15.03.2017 wherein the Commissioner has confirmed the demand of Service Tax amounting to Rs. 3,75,43,125/- along with interest and imposed penalty @50% amounting to Rs. 1,87,71,562/-. 3. Learned counsel for the appellant submitted that the appellant had rendered services to BBNL/BSNL towards execution of the NOFN project, which are exempt from se....
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....ant has rendered services to BSNL, which is a 100% Government of India owned Public Sector Undertaking with an authorized share capital of approximately Rs. 1,50,000 Crores. He further submitted that the scope of services rendered by BSNL envisage development of telecommunication network in India, as evident from the 'aspiration' page of BSNL on its website. The Learned Counsel contended that the nature of operations performed by the company, would qualify BSNL as a governmental authority. There was no doubt that BSNL had been established by the GOI, wherein 100% shareholding also lay in the hands of GOI. BSNL is engaged in functions involving economic development, which is covered under Article 243(a)(i) of the Indian Constitution, as also in clause 3 to the Twelfth Schedule of the Indian Constitution. Hence, the first condition to Sl. No. 12 of Notification No. 25/2012-ST has been satisfied inasmuch as the services by the Appellant have been rendered to a governmental authority. Condition 2: Services are by way of installation and commissioning of original works. Learned counsel submitted that on a combined reading of Sl. No. 12 to the notification along with the de....
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....nsel stated that Section 66E(b) stipulates the scope of a declared service, involving construction activities. The said provision does not define the term 'Construction' and accordingly, the provision has been incorrectly interpreted in the impugned order. 4. Learned Authorized Representative for the Department reiterated the findings in the impugned order and submitted that the exemption under Sl. No. 12 of Notification No. 25/2012 is available, if the specified services are provided to a Government, Local Authority or a Governmental Authority. He submitted that the Adjudicating Authority had held that the appellant provided their services of laying of cables under or alongside roads to the BSNL for a consideration, thus, such activities was for commerce and industry. Further, the impugned order has held that the BSNL is not a Government, Local Authority or a Governmental Authority, and therefore, exemption is not available. 4.1 With regard to the imposition of penalty under Section 78 of the Finance Act, 1994, Authorized Representative submitted that the Adjudication Authority was correct that the appellant had not disclosed the value of services provided to M/s. BS....
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.... and Archaeological Sites and Remains Act, 1958 (24 of 1958); (c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; (d) canal, dam or other irrigation works; (e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or (f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;" 6.1 In the instant case, it has been submitted before us that BSNL is a 100% Government of India owned Public Sector Undertaking with an authorized share capital of approximately Rs. 1,50,000 Crores. The LD Counsel also submitted that the scope of services rendered by BSNL envisage development of telecommunication network in India, as was evident from the 'aspiration' page of BSNL website. Consequently, the Learned Counsel contended that the nature of operations performed by the company, would qualify BSNL as a governmental authority. However, one needs to carefully read the scope the exemption provided in the sa....
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....iding higher bandwidths capabilities for wire line and wireless broadband customers. • Adopt policies and processes to enable transparent, quick and efficient decision making. • Developing marketing team with attitude towards customer care. ........................................................................................................................" 6.2 From the above, it is apparent that even though BSNL is wholly owned by the Government, but it is a State-run Telecom company, whose primary objective is to increase sales revenue with focus on subscriber retention & acquisition by way of strengthening marketing, quality of service and customer delivery. Consequently, any activity undertaken for BSNL would also be for the same purpose, viz., expanding its subscriber base and increase revenues. Therefore, it cannot be said that the NOFN project (now known as Bharat Net project) aimed at bringing broadband connectivity to the Gram Panchayats was only towards planning for economic and social development. Such network was laid in recognition of the fact that expansion was important to increase their subscriber base, thus providing an opportunity t....
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.... for use other than for commerce, industry, or any other business or profession. The term used in the said notification is that 'other than commerce, industry or any other business or profession', which is required to be interpreted strictly, as held consistently by the Hon'ble Supreme Court. Exemption notification should not be liberally construed and the beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. The relevant paras of some of the notable judgments in this regard are reproduced hereinafter: (i) Commissioner of Customs (Import), Mumbai vs. Dilip Kumar & Company - 2018 (361) ELT 577 (S.C.) "41. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit m....
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.... intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption." (iii) Novopan India Limited vs. Collector of Central Excise & Customs, 1978 (2) ELT J 350 "18. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals - and in Union of India v. Wood Papers referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Onc....
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....n the appellant and the Society there was no relationship of master and servant but the appellant supplied raw material and the contractor i.e., the Society produced the goods. But even on the assumption that the appellant had manufactured the goods by employing hired labour and was therefore a manufacturer, still the appellant was entitled to exemption from excise duty since the case fell within the language of the two notifications dated July 31, 1959 and April 30, 1960, and the cotton fabrics were produced on power-looms owned by the co-operative society and there is nothing in the notifications to suggest that the cotton fabrics should be produced by the co-operative society "for itself" and not for a third party before it was entitled to claim exemption from excise duty. It was contended on behalf of the respondent that the object of granting exemption was to encourage the formation of co-operative societies which not only produced cotton fabrics but which also consisted of members, not only owning but having actually operated not more than four power-looms during the three years immediately preceding their having joined the society. The policy was that instead of each such me....
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.... Learned Counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power-looms by constituting themselves into co-operative societies. But the operation of the notification has to be judged not by the object which the rule-making authority had in mind but by the words which it has employed to effectuate the legislative intent. Applying this principle we are of opinion that the case of the appellant is covered by the language of the two notifications dated July 31, 1959 and April 30, 1960 and appellant is entitled to exemption from excise duty for the cotton fabrics produced for the period between October 1, 1959 to April 30, 1960 and from May 1, 1960 to January 3, 1961. It follows therefore that the appellant is entitled to the grant of a writ in the nature of certiorari to quash the order of the Assistant Collector of Central Excise of Baroda dated November 26, 1962 and the appellate order of the Collector of Central Excise dated November 12, 1963." In view of the above discussions, we hold that the appellant is not entitled to the benefit of t....