TaxTMI 
TaxTMI 
2025 (4) TMI 371
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.... 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 continuation of the earlier show cause notice. The grounds relied upon i....
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....mits 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 on the decision of Hon'ble Patna High Court in the case of Shapoorji Paloonji & Company Pvt. Ltd., wherein the IIT was considered as a government authority and allowe....
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....ngaged 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 had to be executed and accordingly electrical works are completed. Further, all the payments were received in cheques after the execution/completion of work. 15. Thus, after investigation, initially, the department was of view that the works ....
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....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 which is exempted from the service tax vide entry no. 14 of Mega Exemption Notification No. 26/12 dated 20.06.2012. They further stated that the work rendered to Railway was exempted even prior to negative list regime. 19. Since the issue pertains to the inclusion or e....
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....cuted 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 disputes have been arisen, have been clarified and tabulated. I notice that at Sl. No. 8, it has been provided that, Sl. No Activity Status 8. Railways electrification, electrification alongside the Railways Track Not a taxable service under any clause of Sub Section (105) of Section 65 of the Finance Act, 1994 24. Thus, it....
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.... 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 prescribed, shall pay simple interest at such rate not below ten percent and not exceeding thirty six percent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, for the period by which such crediting of the tax or any part thereof is delayed." 29. Thus, there can be no doubt that interest is attracted whenever the due tax ....
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....he 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 deliberate evasion of Service Tax by the party, as discussed hereinabove, penalty is imposable upon the party in the instant case. A simple reading of the provisions of Section 78 makes it abundantly clear that when the allegations of suppression of facts, willful mis-statement, fraud, collusion, etc., with intent to evade payment of duty are proved, then the defaulter shall also be liable to pay th....
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....egislature 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, viz. board or authority or body, which fulfilled the three requisite conditions, i.e. : (a) having been established with 90% or more participation by way of equity or control by Government, (b) set up by an Act of the Parliament or a State Legislature, and (c) carrying out any function entrusted to a municipality under Article 243W of the Constitution. It is evident that the scope of the exemption was severely restricted....
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....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 reads as under : ........ In interpreting a taxing statute, "10. equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed : it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to suppl....
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....eaning, 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 ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a court should open its interpretation toolkit containing the settled rules of construction and interpretation, to arrive at the true meaning of the provision. While using the tools of interpretation....
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....ore, 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, "governmental authority" was re-defined with a purpose to make the clause workable in contra-distinction to the earlier definition. Therefore, we cannot overstep and interpret "or" as "and" so as to allow the alternative outlined in clause 2(s) to vanish. 28. Let us consider the problem from a different angle. The revised definition of "governmental authority" and the few punctuations in the definition (two semicolons and two commas) and the conjunction 'or' have been noticed above. Literally read, the conjunction 'or....
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....cept 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 clause or exemption notification. At the outset, we record that there is absolutely no quarrel with the proposition laid down therein. We, however, reject the contention of Ms. Bagchi based on Dilip Kumar (supra) because the ratio is not applicable to the facts and circumstances of this case. This, for the simple reason, that there exists no ambiguity insofar as the interpretation of clause 2(s) is concerned. We are endorsed in our opinion by the Latin maxim quoties in verbis nulla est ambiguitas, ibi nulla expositio contra verba expre....
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....evant 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-ST dated 20.06.2012. 4.6 Explaining the scheme of partial reverse charge mechanism of payment as per Notification No 30/2012-ST, Education Guide clarifies as follows:- "10.1 Partial Reverse Charge With effect from 1.7.2012 a new scheme of taxation is being brought into effect whereby the liability of payment of service tax shall be both on the service provider and the service recipient. Usually such liability is affixed either on the service provider or the service recipient, but in specified services and in specified conditions, such liability shall b....