2019 (6) TMI 1409 - AT - Service Tax

Classification of services - Works Contract Services or not - providing railway siding for non-govt companies by the appellant - HELD THAT - The exclusion under Section 65(105)(zzzza) is in respect of activities undertaken with respect to roads, railways, transport terminals bridges, tunnels etc. and it is the case of the department that the exclusion under railways is meant for the Indian railways themselves and does not extend to those cases where railway siding etc. is made for a private company. The matter has already been decided by this very Bench in the case of KVR RAIL INFRA PROJECTS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, SECUNDERABAD G.S.T. 2019 (5) TMI 376 - CESTAT HYDERABAD and it has not been over-turned by any superior judicial forum and we do not find any reason to deviate from our earlier decision that the word railways in the section does not confine it to public railways or Govt railways. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of providing railway siding for non-govt companies under works contract service.

Analysis:
The appeal in question challenges the taxability of providing railway siding for non-government companies under the works contract service. The central issue revolves around whether such services fall under the purview of works contract service as defined in Section 65(105)(zzzza) of the Finance Act 1994. The department argues that the exclusion under railways in this section is intended for Indian railways themselves and does not extend to cases where railway siding is constructed for private companies. However, the tribunal, citing a previous decision in the case of KVR Rail Infra Projects Pvt Ltd, clarifies that the word "railways" in the section is not limited to public or government railways. The tribunal emphasizes that the exclusion pertains to activities related to roads, railways, transport terminals, bridges, tunnels, etc., and not specifically to public or government railways. Therefore, the tribunal finds no reason to deviate from its earlier decision and rules in favor of the appellant, setting aside the impugned order.

The tribunal refers to the case of International Metro Civil Contractors to support its interpretation. In this case, it was held that services provided for the construction of Delhi Metro Rail Corporation, a rapid rail corridor, were not liable to tax under works contract service. The tribunal highlights that the definition of works contract service does not specify that railways should be government railways or used for public transport of passengers or goods. This broader interpretation is supported by various legal precedents, including decisions by the Hon'ble Apex Court, High Courts, and other tribunals. The tribunal also notes that the exclusion under works contract service for railways encompasses a wide range of activities related to railways, including construction and installation work, without limiting it to public or government railways. Consequently, the tribunal concludes that the demand for service tax for the construction of railway sidings/tracks cannot be sustained under Commercial or Industrial Construction Service or Works Contract Service, and sets aside the demand accordingly.

In conclusion, the tribunal upholds the appellant's argument that providing railway siding for non-government companies does not fall under the taxable works contract service. The tribunal's decision is based on a comprehensive analysis of the relevant legal provisions, precedents, and interpretations of the term "railways" in the context of works contract service. By aligning with its previous ruling and considering the broader scope of activities covered under the exclusion for railways, the tribunal grants the appeal and sets aside the impugned order, providing the appellant with consequential relief.