2020 (2) TMI 40 - AT - Service Tax

Levy of service tax - construction of Railway siding for private parties - extended period of limitation - HELD THAT - Reliance placed 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 where it was held that Section 65(25b) or Section 65(105)(zzzza) of the Finance Act, 1994 does not use the word railways for public carriage or that the railways should be government railways. The definition uses the words railways only. Therefore, the execution cannot be restricted to the government railways which are used for public transport of passengers or goods. It is further urged that no words can be added while interpreting a notification and when the language is clear and as per the Literal Rule of Interpretation of statutes; Even the inclusive definition of the term railway is taken from the Railway Act, the exemption is provided to Railways and not to railway alone and hence private railway siding is also exempted. Time Limitation - HELD THAT - The audit objection was raised on 26.03.2012 on some different grounds to which reply was filed by the appellant on 10.05.2012. Show cause notice was issued after two years on 11.04.2014, thus, is barred by limitation - In the second appeal, for the period ending April, 2014, the show cause notice is not time barred. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the construction of Railway siding for private parties is liable for service tax.

Analysis:
The issue in the appeals revolved around the liability of the appellant, who constructed Railway siding for private parties, to pay service tax. The show cause notices were issued invoking the extended period of limitation and were adjudicated upon contest. The appellant contended that the works executed by them were work contracts related to Railways, specifically excluded under the work contract service. They argued that the definition of "Railways" under the Railways Act, 1989, did not differentiate between private or public use. The appellant also cited Notification No. 25/2012-ST, which exempted original works pertaining to railways. They further relied on a Tribunal decision and an Authority for Advance Ruling case to support their position that railway sidings built for private parties fell outside the taxable ambit.

The appellant also argued that the demand was barred by limitation, as the show cause notice was issued after a significant delay following the audit objection. The Tribunal noted that a similar issue had been settled in favor of the appellants in a previous Final Order by a co-ordinate Bench. They referenced other judgments supporting the exclusion of private railway sidings from service tax liability. Consequently, the Tribunal held that the show cause notice for confirmation of demand was misconceived. As a result, both appeals were allowed, and the impugned orders were set aside.

In conclusion, the Tribunal's judgment clarified that the construction of Railway siding for private parties was not liable for service tax based on the interpretations of relevant laws and precedents. The decision highlighted the importance of statutory definitions and exemptions in determining tax liabilities and emphasized the significance of timely issuance of show cause notices within the limitation period.