TaxTMI 
TaxTMI 
2025 (4) TMI 371
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....from them under the provisions of Section 73(1) of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017. ii) I also order for recovery of Interest under Section75 of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017, at appropriate rates from the due date till the date of actual deposit of the confirmed amount of Service Tax. iii) In terms of Section 78 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017, I impose the penalty of Rs.1,09,93,333/- (Rupees One Crore Nine Lakh Ninety Three Thousand Three Hundred and Thirty Three only)." 2.1 Appellant-assessee is engaged in the work of designing, supply, erection, commissioning and installation of electrical equipments and devices including wiring and fitting thereof. They are also engaged in Construction work, repair and maintenance of electrical equipments under annual maintenance contracts and Supply of tangible goods Service. They are registered under the category of "Works Contract Services" and "Management, Maintenance or Repair Services". 2.2 In terms of Section 67 and Section 73(1) of the Finance Act, 1994, the Show cause Notice was issued to the assessee in ....
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.... Shri A.K. Choudhary Authorized Representative for the revenue. 3.2 Arguing for the appellant learned Counsel submits that- • Appellant is engaged in providing Works contract services to Indian Railways, IIT, Kanpur and they also involved to provide services of maintenance and repair for IIT Kanpur. All such services involve transfer of property in goods during execution, VAT is duly discharged by the appellant. • The work contract services provided by the appellant are in respect of original work. The services provided in the category of Work Contract Services and the same are not taxable for the entire period. • For the period prior to 01.06.2007 Work Contract Services could not have been taxed as per the decision of Hon'ble Supreme Court in the case of Larsen & Tubro Ltd. 2015 (39) S.T.R. 913 (S.C.). • For the period after 01.06.2007 to 30 June, 2012 Work Contract Services (WCS) in respect of railways are not taxable as per para 1 of the definition, this fact has been admitted by the adjudicating authority and the demand has been duly dropped. • In respect of services provided to IIT, Kanpur, reliance is placed ....
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....e case records, the documents relied upon, and party's written defense replies as well as oral submissions made at the time of personal hearing. 14. The facts of the case in brief are that on the basis of intelligence that the party is engaged in the work of designing, supply, erection, commissioning and installation of electrical equipments and devices including wiring and fitting thereof and annual maintenance of the electrical equipments which appears to be taxable service and the party was not paying service tax, a team of Preventive officers of Central Excise Commissionerate, Kanpur, visited the business premises of M/S Kailash Electricals, Kanpur. On examination of records of the party it was found that the party is engaged in executing work relating to supply, erection, design, installation and commissioning of electrical work for Railway and I.LT. Kanpur. The work comprises of wiring, fitting, fitting of Panel, Cable, erection of transformers etc. They were also taking annual maintenance contract of Electrical equipment for 1.1.T. Kanpur. For getting work order, they get the approval from various departments under Letter of Acceptance along with the site where work....
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....nd metro. The allegation of department is that the work executed by the party for Railways mainly includes modification work of sub-station, shifting of transmission lines, improvement in reliability of OHE system, execution of balance work with regard to design, supply, erection, testing. and commissioning of Traction sub-station, break-down maintenance of equipments installed, which does not appear to have been included in the definition of "original works" as defined under Explanation 1(a) to Rule 2A of the Service Tax (Determination of Value) Rules, 2006 as amended. Besides this, it is further alleged that the party have also executed works related to design, supply, erection, testing and commissioning of Traction sub-station for Railways, but the party could not adduce any evidence showing the original nature of such works executed by them for Railways during the year 2014-15. Thus, the exemption at Sl. No. 14 (a) of Notification No 25/2012-ST dated 20.06.2012 as amended does not appear to be available to them in respect of the work executed by them for railways. 18. The party, on the other hand has contested that their contract is a composite contract for Railways wh....
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.... party by Railways is squarely covered under the definition of "Original Work' as defined above. Thus, the proposed liability in respect of Railways deserves to be quashed. 22. I further find that the department has also stated that party has failed to adduce any evidence showing the original nature of such work executed by them for Railways. In this regard, I observe that the party has submitted letters of the acceptance issued by the Railways authorities in their favour which reveal that orders of the railway to the party were placed for design, supply, erection, testing of commissioning of traction sub stations feeding post, SSF equipments. The LOA were duly signed and executed. Thus, in my opinion the LOA submitted by the party is enough evidence to confirm the nature of work executed by the party for the Railways. 23. At this juncture, I would also like to refer the clarification issued by TRU vide No. 123/5/2010-TRU dated 24.05.2010 where clarification has been given specially to wipe out the confusion in field formation in respect of work of laying of cables and similar activities. In the given circular taxable status of various activities, on which dis....
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....e work other than "original work" for discharging the liability of service tax. 27. In view of the above facts, I observe that as per the details given in the RUDs (No.3), the party has executed the work for parties other then Railways for Rs 14,31,86,548/- and they are liable to Service Tax Rs. 1,23,88,500/- on the abated value of Rs. 10,02,30,584/-. Since the party has already paid Rs 13,95,167/-, I hold that party have rendered themselves liable to pay Service Tax of Rs 1,09,93,333/- and the same is recoverable from them. 28. In so far as the Department's allegation that interest under Section 75 of the Finance Act, 1994 is to be recovered from the party on the Service Tax not paid, I note that charging of interest on the Service Tax amount not paid is not contested. Nevertheless a perusal of the relevant provision is useful to settle the matter beyond doubt and in this regard I find that Section 75 of the said Act provides that:- "Every person, liable to pay the tax in accordance with the provisions of Section 68 or Rules made there under, who fails to credit the tax or any part thereof to the account of the Central Govemment within the period pre....
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....k Contract Service' and 'Management, Maintenance or Repair Service', they were filing ST-3 returns showing provided services in the category of Work Contract Service and Management, Maintenance or Repair Service and paid Service Tax accordingly However, the party has failed to pay due Service Tax on the services provided by them during the subject period on the issue of work executed by the is not covered under the definition of Original Work' as defined under Rule 2A of the Service Tax (Determination of Value) Rules, 2006. Thus, penalty under Section 78 of the Finance Act, 1994 is imposable One more fact, which I would like to add that even after the investigations were initiated. and the party became fully aware of the provisions of the Finance Act, 1994, they did not bother to pay appropriate Service Tax on the taxable services provided by them. This fact clearly confirms the party's intention to evade payment of Service Tax, and once, such intention gets proved, the presence of pre-requisite for imposition of penalty under Section 78 of the Finance Act, 1994 gets confirmed This cannot be equated with the mere failure on the part of the party. Hence, for this....
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....ould be apt to juxtapose the relevant clauses from the Exemption Notification and the Clarification Notification for facility of appreciation : EXEMPTION NOTIFICATION CLARIFICATION NOTIFICATION "governmental authority" means a board, 2(s) or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution; "governmental authority" means an 2(s) authority or a board or any other body; (i) Set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; 15. Having read the two definitions, first and foremost, it is necessary to ascertain the objective behind the Clarification Notification which amended the Exemption Notification and re-defined "governmental authority". A bare perusal of the Exemption Notification reveals that the exemption therein was only extended to those entities....
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.... Bengal v. Corporation of Calcutta [(1967) 2 SCR 170], a nine-judge Bench of this Court, relying upon Craies' On Statute Law (6th edn.), stated that where the language of a statute is clear, the words are in themselves precise and unambiguous, and a literal reading does not lead to absurd construction, the necessity for employing rules of interpretation disappears and reaches its vanishing point. 19. This Court in Union of India & Ors. v. Ind-Swift Laboratories Ltd. [(2011) 4 SCC 635 = 2011 (265) E.L.T. 3 (S.C.) = [2011] 30 STT 461 (SC)], held that harmonious construction is required to be given to a provision only when it is shrouded in ambiguity and lacks clarity, rather than when it is unequivocally clear and unambiguous. 20. What is plain and ambiguous from a bare reading of a provision under consideration must be interpreted in the same way as it has been stipulated and not in a way that it presumes deficiency and radically changes the meaning and context of the provision. This is the view expressed in the decision of a five-judge Bench of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. [(1961) 2 SCR 189]. The relevant passage therefrom....
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....and "and" does not generally mean "or". 23. When the meaning of the provision in question is clear and unambiguous by the usage of "or" in clause 2(s), there remains no force in the submission of Ms. Bagchi that "or" should be interpreted as "and". In our opinion, the word "or" employed in clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word "or" in clause 2(s) clearly appears to us to have been used to reflect the ordinary and normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. We are fortified in our view by the decision of this Court in Sri Jeyaram Educational Trust v. A.G. Syed Mohideen [(2010) 2 SCC 513], where it was held thus : It is now well settled that a provision of "11. a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and....
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....o differentiate it from sub-clause (ii). Further, it can be observed upon a plain and literal reading of clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii) closes with a comma. This essentially supports the only possible construction that the use of a comma after sub-clause (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause (i), the scope of which ends with the semicolon. We are, therefore, of the opinion that the long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after sub-clause (i), followed by the word "or", has established it as an independent category, thereby making it distinct from sub-clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word "and" and without the punctuation semicolon. While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define "governmental authority" whichever way it wished; however, "go....
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....ed authority/board/body covered by the aforesaid construction of the definition of "governmental authority" in clause 2(s) of the Clarification Notification, which the appellants appeal to us to accept, having been brought to our notice, we are unable to find any fault in the decisions of the Patna High Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL. 29. We need not draw guidance from any of the decisions cited by Ms. Bagchi, except one, on the question of construction of the relevant clause because none of those decisions had the occasion to deal with the issue emanating from the Exemption Notification and the Clarification Notification that we are tasked to consider. 30. Ms. Bagchi heavily relied on the decision of a five-judge Bench of this Court in Dilip Kumar (supra) to urge that in case of any ambiguity in interpreting an exemption notification, the interpretation that favours the revenue must be adopted; also, the burden of proving applicability of the exemption notification would be on the assessee to show that his case comes within the parameters of the exemption....
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....dges, it may be safely presumed that the legislature intended what the words plainly say. This is the real basis of the so-called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the legislature to others as well as judges." 32. Keeping the above-said ratio in mind, an interpretation of the relevant provision resulting in the expanded scope of its operation cannot in itself be sufficient to attribute ambiguity to the provision." Thus, we find merit in the appeal filed by the appellant-assessee in this regard. 4.5 In respect of the services provided to Madhyanchal Vidyut Vitran Nigam Ltd the demand has been confirmed after allowing the benefit of abatement. Appellant do not dispute the leviability of service tax, submit that amount of service tax due has been paid by them by taking abatement as applicable. Also they claim that they are liable to pay only 50% of the service tax due in terms of Notification No 30/2012....