TaxTMI 
TaxTMI 
2025 (3) TMI 165
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....e and the same, these petitions are disposed of by way of a common 2. Brief facts: 2.1. The petitioner is a joint venture of M/s. Stroytechservice LLC, Russia and KEC International Limited, formed for executing various railway projects in India. The petitioner was assigned the following works contract vide Letter of Acceptance No. RVNL/ED/P/MAS/MEJ-NCJ Doubling/OT-2 dated 11.10.2018, for a total contract value of INR 712.48 Crores by RVNL for "Doubling of track between Vanchi Maniyachchi to Nagercoil, construction of roadbed, minor bridges, platforms, buildings, water and effluent treatment facilities, wagon / coaching maintenance infrastructure, supply of ballast, installation of tracks and other electrical, signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway". 2.2. During the period April 2018 to March 2019, the petitioner paid GST at the rate of 12%, on the above contract. The petitioner had discharged taxes at the rate of 12% on the premise that the said contract constitutes works contract services of original works pertaining to Railways covered under Serial No. 3 (v) (a) of the following notifications viz., ....
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....d and as subsequently amended. 2.6. On a reading of the above notifications, it is clear that a composite supply of original works as defined in clause (119) to Section 2 of the CGST Act, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if), by way of construction, erection, commissioning or installation, pertaining to railways, including monorail and metro is liable to be taxed at 12%. 3. While so, the petitioner was served with an intimation in Form GST DRC-01A dated 21.12.2022. The said notice proceeds on the premise that the subject contract between the petitioner and RVNL is liable to tax at 18%, instead the petitioner had erroneously discharged taxes at lower/concessional rate of 12% on the works contract executed by the petitioner on the following premise viz., i. RVNL does not function under the direct control of Railways; ii. RVNL is a subsidiary of Indian Railways incorporated under the Companies Act, 1956; iii. RVNL is a public sector undertaking listed on the stock exchange; iv. Employees working in RVNL are not considered as employees; and v. RVNL undertakes corporate social responsibility initia....
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.... a) That the scope of the petitioner's services would clearly fall within the scope of Sl.No. 3 (v) (a) of Notification No.11/2017, thus the levy of the higher rate of tax at 18% is arbitrary. b) That the impugned orders have been passed without proper consideration of the reply and thus suffers from non-application of mind to relevant factors thereby vitiating the order. c) That the impugned orders suffers from error apparent on the face of the record, inasmuch as the impugned order relies upon an advance ruling of AAR, Gujarat in M/s. SKG-JK-NMC Associates (JV), 2021(1) TMI 425, overlooking the fact that the said ruling has since been reversed by the Appellate AAR, Gujarat in M/s. SKG-JK-NMC Associates (JV), 2021 (10) TMI 152. d) The impugned orders are contrary to the rulings delivered by AAR of other States, wherein it was held that the GST on services similar, if not identical, to those rendered by the petitioner, would be entitled to the concessional rate of 12%. 7. CASE OF THE RESPONDENT: 7.1. To the contrary, it is submitted by the learned Additional Government Pleader for the 1st respondent and the learned Counsel for the 2nd responde....
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....ntract as defined in clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017 other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above* [*the highlighted portion is inserted vide notification No. 3/2019 - Central Tax (rate) w.e.f. 01.04.2019.], supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) railways, including monorail and metro; (...) (6) - 12. Status/ Features of RVNL: 12.1. It is relevant rather necessary to note the features of RVNL, with whom the petitioner had entered into the subject contract. (a) RVNL functions as an extended arm of the Ministry of Railways and works for and on behalf of MoR. [https://rvnl.org/home]. The Central Government (ie. of India acting through MoR) presently holds 78.20% equity share capital of RVNL. [Rail Vikas Annual Report 2021-2022]. The Board of Directors of RVNL includes nominee directors appointed by MoR. RVNL functions under the direct control of Railways. The functions of RVNL and Indian Railways are inseparable from each other and both work in tandem to develop the rail transport infrastructure o....
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.... to clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956;" 13.3. The above illustrations would clearly show that whenever the legislature intended to incorporate the definitions contained in other enactments, it has provided expressly. There is no definition for 'railways' under the GST Act. It is trite law that legislature must be imputed with wisdom of the legislations in force at the time of its enactment. If the legislature intended to incorporate or refer to the definition of 'railways' as contained under the Railways Act, 1989, it would have done so expressly as could be seen from the above illustrations. The attempt by the respondent/authority to understand the scope of the notification by looking to the expression 'railways', as defined under the Railways Act, 1989, appears to be in conflict with the legislative intent in the absence of incorporation or reference to the above definition under the GST Act. In this regard, it may be relevant to refer to the following judgments: a) CCE v. Fiat India (P) Ltd., reported in (2012) 9 SCC 332: "39. It is well settled that whenever the legislature uses certain terms ....
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.... the public carriage of passengers or goods, and includes- (a) all lands within the fences or other boundary marks indicating the limits of the land appurtenant to a railway; (b)all lines of rails, sidings, or yards, or branches used for the purposes of, or in connection with, a railway; (c) all electric traction equipments, power supply and distribution installations used for the purposes of, or in connection with, a railway; (d) all rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, roads and streets, running rooms, rest houses, institutes, hospitals, water works and water supply installations, staff dwellings and any other works constructed for the purpose of, or in connection with, railway; (e) all vehicles which are used on any road for the purposes of traffic of a railway and owned, hired or worked by a railway; and (f) all ferries, ships, boats and rafts which are used on any canal, river, lake or other navigable inland waters for the purposes of the traffic of a railway and owned, hired or worked by a railway administration, but does not include- ....
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....tainer Corporation of India Limited (CONCOR) 5. Dedicated Freight Corridor Corporation of India (DFCCIL) 6. IRCON International Limited 7. Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) 8. Indian Railway Finance Corporation Limited (IRFC) 9. Integral Coach Factory, Chennai 10. Konkan Railway Corporation Limited 11. Kutch Railway Company Limited, Delhi 12. Mumbai Railway Vikas Corporation Limited (MRVC) 13. Pipavav Railway Corporation Limited 14. Rail India Technical and Economic Service Limited (RITES) 15. Rail Vikas Nigam Limited 16. RailTel Corporation of India Limited. 15.2. If the expression railway employed in the notification were to be construed to be confined to Indian Railway in its operation it may produce results which are incongruous inasmuch as the relevant entry under the notification covers original works pertaining not only to railways but also Mono Rail and Metro Rail which is undisputedly not part of the Indian Railway. The reference to Mono Rail and Metro Rail is only to show that the object does not appear to be to grant concession under t....
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....on, the definition of Railway under IRA extracted above does not appear to limit its operation to any particular entity or in particular Indian Railways instead covers the entire industry / utility viz., Railway. Thus any attempt to suggest that the expression "railway" employed in the subject notification would only cover "Indian Railways" would fall foul of the settled principle that exemptions cannot be curtailed by artificially narrowing down the width of the exemption or by importing conditions. It may be relevant to keep in mind that while exemption notifications must be strictly construed, it certainly would not mean that the scope of the exemption notification can be curtailed by importing conditions or giving an artificially restrictive meaning to the words in an exemption notification. In this regard, it may be relevant to refer to the following judgments: i) CCE v. Himalayan Cooperative Milk Product Union Ltd., (2000) 8 SCC 642 : "8. Such notifications by which exemption or other benefits are provided by the Government in exercise of its statutory power, normally have some purpose and policy decision behind it. Such benefits are meant to be provided to ....
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....ton power looms, registered on or before 31-3-1961. The question before the Court was whether the appellant who got the cotton fabric produced from one of the registered cooperative societies was also covered under the aforesaid notification. It may be of some significance that the Revenue tried to interpret the aforesaid exemption by relying on the purposive interpretation by contending that the object of granting the above exemption was to encourage the formation of cooperative societies which not only produced cotton fabrics but 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 member operating his looms on his own, he should combine with others by forming a society to produce clothes. It was argued that the goods produced for which exemption could be claimed must be goods produced on his own and on behalf of the society. The Court did not countenance such purposive interpretation. It was held that a taxing legislation should be interpreted wholly by the language of the notification. 45. The relevant ....
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.... not be relevant in construing the subject notification. In any view, even applying the definition of Railway as defined under the Indian Railway Act, 1989, to the contract between the petitioner and M/s. RVNL which is for doubling of track between Vanchi Maniyachchi to Nagercoil, construction of roadbed, minor bridges, platforms, buildings, water and effluent treatment facilities, wagon / coaching maintenance infrastructure, supply of ballast, installation of tracks and other electrical, signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway, it appears to me from the discussion supra that it would still constitute original work pertaining to Railway for the purpose of the subject notification and thus covered under Sl.No. 3 (v) (a) of the said notification. 18. Construction that leads to Consistency: 18.1. The impugned order places reliance upon the Advance Ruling Authority in Re: M/s SKG-JK-NMC(JV),2021 (1) TMI 425 ,over looking the fact that the above AAR has been overruled by the Appellate Advance Ruling Authority in Re: M/s.SKG-JK-NMC Associates (JV), 2021 (10) TMI 152 and thus the impugned order suffers from erro....