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2013 (8) TMI 530 - AT - Service TaxCommercial or Industrial Construction Service u/s 65(30a)(b) - Assesse undertook civil construction of viaduct and stations of Delhi Metro Railway Project - Revenue was of the view that the assesse were liable to discharge service tax on the activity - Held that - The demand of Service Tax on construction undertaken for Delhi Metro Rail was clearly unsustainable in law Demand and Penalty was set aside. In view of the specific exclusion of railways from commercial and industrial construction service - the question of imposing any Service Tax on the railways run by the DMRC does not arise at all - There was no evidence to show that the Government neither examined the matter and came to such a conclusion nor was there any circular or notification issued by the Government in this regard DOYPACK SYSTEMS (PVT) LTD Versus UNION OF INDIA 1988 (2) TMI 61 - SUPREME COURT OF INDIA . The definition had no bearing whatsoever and not applicable for interpreting the law as it stood at the relevant time - Revenue relied upon Section 65D(o) in the context of transportation of passengers by various modes such as monorail, tramways, metro rails etc - The definition came into force only w.e.f 01/07/2012 but the demands in the order pertain to the period prior to 01/07/2012 - The exemption also clearly indicated the legislative intent of not taxing construction work pertaining to Railways - Decided in favor of assesse.
Issues:
Service tax liability on civil construction for Delhi Metro Railway Project under 'Commercial or Industrial Construction Service' category. Analysis: 1. Service Tax Liability: The appellant, a construction company, undertook civil construction for Delhi Metro Railway Project without discharging any service tax liability. The department issued show cause notices demanding service tax, interest, and penalties. The impugned order confirmed the demands. The appellant contested, arguing that the activity falls under the exclusion of 'commercial or industrial construction service' as per the Finance Act, 1994. 2. Appellant's Submissions: The appellant contended that Delhi Metro Rail Corporation qualifies as a railway owned by the Government, thus exempting the construction activity from service tax under the definition of 'Commercial or Industrial Construction Service.' Reference was made to a Delhi High Court judgment regarding the definition of 'railway' under the Railways Act, 1989, supporting the appellant's position. 3. Revenue's Arguments: The Revenue maintained that the construction service provided to DMRC falls within the scope of 'Construction of Civil Structure' primarily for commerce, emphasizing DMRC's commercial nature. Reference was made to a government decision regarding the exemption of service tax for monorail projects to counter the appellant's arguments. 4. Tribunal's Decision: The Tribunal analyzed the definitions and legal provisions related to railways, construction services, and relevant judgments. It concluded that the definition of 'Commercial and Industrial Construction Service' excludes activities related to railways without differentiating between types of railways. The Tribunal rejected the Revenue's reliance on a government decision and a post-2012 definition, as they were not applicable to the relevant period. The Tribunal also highlighted the Delhi High Court's judgment, emphasizing that DMRC qualifies as a government railway, thus exempt from service tax liability. 5. Legal Principles: The Tribunal invoked legal principles emphasizing a broad interpretation of statutes and the commercial nature of Indian Railways. It referenced a notification exempting construction works related to railways from service tax, supporting its decision to set aside the service tax demand and penalties. 6. Final Decision: The Tribunal held that the service tax demand on construction for Delhi Metro Rail was unsustainable in law, setting it aside along with the penalties. The appeals were allowed, and cross-objections were disposed of accordingly. This detailed analysis of the judgment showcases the legal intricacies surrounding the service tax liability on civil construction activities for the Delhi Metro Railway Project under the 'Commercial or Industrial Construction Service' category.
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