TaxTMI 
TaxTMI 
2024 (11) TMI 724
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....ng only w.e.f. 01.08.2011 and have been exclusively providing services in respect of only one customer namely FCI a wholly owned organization of the Government of India and solely relating to the maintenance of Railways as per the scope of services stipulated in the Technical Specification of the Agreement. The work inter alia involved through Packing of track, Picking up slag, Lubrication and oiling of fish plates and bolts, Creep adjustment by pulling back rails, Overhauling of track, O.H. of points and crossing, O.H. of level crossing and Repairs of cess and Cleaning of side drains and Catch water drains. The Appellant had rendered services under Works Contract as evident from the copy of agreement provided to the Department which clearly provided for payment of VAT by the Appellant on items used by them in execution of the work. Show cause notice [SCN] dated 29.11.2014 was issued proposing as under:- (i) An amount of Rs.36,17,688/- (Rs. Thirty Six Lakhs Seventeen Thousand Six Hundred and Eighty eight only) charged and received from their customer as taxable amount during the F.Y. 2011-12 and F.Y. 2012-13 in lieu of providing the taxable services falling under the category of ....
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..../-(Rupees Ten Thousand only) upon the party under Section 77 of the said Act for contravention of various provisions of Section 67 & 68 of the Act ibid and Rule 6 of the Service Tax Rules, 1994. 4. I impose penalty of Rs.3,58,598/- under Section 78 of the Finance Act 1994 for suppressing the value of taxable services provided by them and contravening the provisions of Finance Act, 1994 with intent to evade payment of Service Tax. 5. I impose penalty /late fee of Rs.1,00,000/- for ST-3 returns under Section 70 of the Finance Act, 1994 with Rule 7C of the Service Tax Rules, 1994 for failure to furnish prescribed ST-3 returns for the F.Y. 2011-12 & 2012-13." 4. Being aggrieved the Appellant filed appeal before the first Appellate Authority and vide Order-in-Appeal the following order was passed:- "6. I have carefully gone through the case records, grounds of appeal and submission of the Appellant during personal hearing. I find that in the instant appeal, main issue for deliberation is admissibility of exemption from service tax on the service of maintenance of private railway side under Food Corporation of India under the provisions of notification No.24/2009-S.T. dated 27.07.....
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....26AS, therefore, I have reason to believe the details of transaction are entered in specified record. Therefore, I reduce the penalty under Section 78 to 50% of the tax amount i.e. Rs.1,79,299/- only. I do not interfere with the quantum of penalty of Rs.10,000/- imposed under Section 77, however, in respect of penalty of Rs.1,00,000/- under section 70 for non filing of ST-3 returns. I find that penalty under section 70 was not proposed in the show cause notice hence, cannot be invoked in the O-I-O. Penalty under section 77 for contravention of provisions of section 70 was proposed which has been imposed." 5. Being aggrieved the Appellant has filed the present appeal before the Tribunal. 6. Heard both the sides and perused the appeal records. 7. The only issue for our consideration in this appeal is admissibility of exemption from service tax on the services of maintenance provided to Railway site under FCI. Vide the impugned order, the first Appellate Authority held that since the activities of the Appellant are provided for use of FCI and hence are not Railways for public carriage of passenger or goods. Therefore, the exemption under Notification No.24/2009-ST dated 27.07.2009....
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....zzza) does not make any differentiation between a Government railway or a non-Government railway. These sections merely uses the word 'railways'. The Railways Act defines government railway under section 2(20). Government railway 'means a railway owned by the Central Government'. Section 2(25) of the Act defines a 'non-governmental railway'. It means a railway other than a Government railway. The definition of Commercial or Industrial Construction Service and Works Contract Service contained in Section 65(25b) or Section 65(105)(zzzza) does not state that only these 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 31-3-2005 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 al....
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....ays, metro rails, etc. This definition came into force only w.e.f. 1-7-2012 but the demands in the impugned order pertain to the period prior to 1-7-2012 and therefore this definition has no bearing whatsoever and no application for interpreting the law as it stood at the relevant time. 5.4 The Hon'ble High Court of Delhi in the DMRCs case (supra) has held that Delhi Metro Rail is Government Railway as defined in the Indian Railway Act. If that be so, the question of levy of service tax under "Commercial or Industrial Construction Service" would not arise at 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 th....
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....ecision has been followed by Hon'ble Delhi High Court as well in the case of DMRC itself titled as DMRC v. Municipal Corporation of Delhi, 2008 (103) DRJ 369. Hon'ble High Court of Karnataka in the case of DMRC v. Ministry of Finance, 2013 (6) T.M.I. 78 has also held that work contract services in respect of railways are excluded under Clause 1 of 65(105)(zzzza) of the Act i.e. such contracts will fall outside the definition of taxable service and consequently no tax shall be leviable under Section 66 of the Act on the value of such services. This Tribunal in the case 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....