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2023 (9) TMI 1377 - AT - Service TaxNon-payment of service tax - Works Contract Service - Erection, Installation and Commissioning Service - Repair and Maintenance Service - reverse charge mechanism - Penalty on Director u/s 78A of the Finance Act, 1994. Works Contract services including sub-contracts in respect of Railways - HELD THAT - The department has interpreted the word Railways in the aforesaid notification and restricted it's meaning to cover only Railways meant for public carriage of passengers or goods - It is observed that there is no such restriction available in the Notification. A plain reading of the Notification reveals that the exemption is available to all Railways whether it is run by Government or the tracks are laid at private Firms. The exemption notification has a wider impact and it is sufficient to cover any infrastructure as Railway. As there is no mention of the fact that the structure has to be used for public carriage, we hold that the exemption is available to all Railway infrastructure. In the case of KONKAN RAILWAY CORPORATION LTD VERSUS COMMISSIONER OF CGST CENTRAL EXCISE 2023 (2) TMI 1175 - CESTAT MUMBAI , the Tribunal has held The taxable service in Finance Act, 1994 excluding railways from the ambit of the service did not place any restriction on benefit going to private railways. The statute, too, did not consider it necessary to fall back on the definition of railways in another statute for determination of taxability and it is not open to the adjudicating authority to arrogate that privilege in an executive capacity. The intent of exclusion prior to 1st July 2012, and exemption for the period, therefore, is abundantly clear. Thus, the exemption is available to all Railway infrastructures. Accordingly, the demands confirmed are not sustainable. Repair and maintenance service provided to Railways - HELD THAT - The Appellant has already paid service tax amounting to Rs.45,51,838/- along with interest thereon. For the balance tax of Rs. 14.69,556/-, they stated that they are not liable to pay the tax, as the abatement benefits as provided under Rule 2A of Service Tax (Determination of Value) Rules, 2006 has not been properly considered in respect of the parties M/s Rites (Haldia) and M/s Rites (Chandrapura). The abatement has been completely denied on the service provided to M/s Bhushan Steel Limited. - The balance demand of service tax of Rs. 14.69,556/-,is not sustainable and therefore, the same is set aside. Demand under reverse charge mechanism under the category of Goods Transport Agency Service , Legal Consultancy Service , Repair Maintenance Service and Rent a Cab Service - HELD THAT - In the SCN only payment of Rs. 17,98,959/-has been considered. The appellant stated that the balance tax of Rs.76,148/-is not payable by them. The Appellant explained the reasons for the same which are detailed in their submissions mentioned in Paras 6, 7.1, 7.2 and 7.3 supra. The reasons for the difference is mainly due to wrong adoption of effective rate of RCM, incorrect abatement given to GTA service and incorrect adoption of rate of service tax. We agree with the calculation submitted by the Appellant mentioned in Paras 6, 7.1, 7.2 and 7.3 supra . Accordingly, the balance tax of Rs.76,148/- is not sustainable and therefore, we set aside the same. Penalty on Director u/s 78A of the Finance Act, 1994 - HELD THAT - The Appellant has already paid the service tax along with interest and the same has been appropriated in the impugned order. There is no evidence brought on record to establish suppression of fact with an intention to evade payment of tax. Accordingly, we hold that no penalty imposable under section 78 of the Finance Act, 1994 and the same is set aside. No penalty imposable under Section 77(1)(a) of the Finance Act, 1994 and the same is set aside. There is no evidence available to implicate the Director of the Firm in non payment of service tax. As all the demands confirmed in this order has already been paid along with interest and the sane has already been appropriated in the impugned order, the penalty imposed on the Director under section 78A of the Finance Act, 1994 is set aside. Appeal disposed off.
Issues Involved:
1. Exemption under Notification No. 25/2012 for Works Contract Services related to Railways. 2. Taxability of Repair and Maintenance Services provided to Railways. 3. Tax liability under Reverse Charge Mechanism (RCM). 4. Imposition of penalties under sections 77 and 78 of the Finance Act, 1994. Summary of Judgment: 1. Exemption under Notification No. 25/2012 for Works Contract Services related to Railways: The Appellant contended that their services related to Railways are exempted by Notification No. 25/2012. The department's interpretation restricting the exemption to "Railways meant for public carriage of passengers or goods" was challenged. The Tribunal observed that the notification does not impose such restrictions and should cover all Railway infrastructures, including private tracks. The Tribunal supported this view with decisions from similar cases, concluding that the exemption is available to all Railway infrastructures. Consequently, the demand of Rs. 3,43,31,013 for Works Contract Service and Rs. 68,80,060 for Erection, Installation, and Commissioning Service were set aside. 2. Taxability of Repair and Maintenance Services provided to Railways: The Appellant had paid Rs. 45,51,838 out of the confirmed demand of Rs. 60,21,394 for repair and maintenance services. They argued that the abatement benefits under Rule 2A of Service Tax (Determination of Value) Rules, 2006 were not properly considered. The Tribunal agreed, noting that the service tax should be payable on 60% of the total amount for works contract services related to immovable property. The balance demand of Rs. 14,69,556 was set aside. 3. Tax liability under Reverse Charge Mechanism (RCM): The Tribunal found discrepancies in the department's calculations regarding the effective rate of RCM, abatement for Goods Transport Agency Service, and the rate of service tax. The Appellant had already paid Rs. 18,22,472 out of Rs. 18,98,620 confirmed under RCM. The balance tax of Rs. 76,148 was set aside due to incorrect calculations. 4. Imposition of penalties under sections 77 and 78 of the Finance Act, 1994: The Tribunal observed no evidence of suppression of facts with the intent to evade tax. Since the Appellant had paid the service tax along with interest, the penalties under sections 77(1)(a) and 78 on the Appellant Company, as well as the penalty on the Director under section 78A, were set aside. Order: (i) The demand of service tax of Rs. 3,43,31,013 for Works Contract Service is set aside. (ii) The demand of service tax of Rs. 68,80,060 for Erection, Installation, and Commissioning Service is set aside. (iii) Out of the demand of Rs. 60,21,394 for Repair and Maintenance Service, Rs. 45,51,838 along with interest is confirmed. The balance demand of Rs. 14,69,556 is set aside. (iv) Out of the demand of Rs. 18,98,620 under RCM, Rs. 76,148 is set aside, and the balance amount is upheld. (v) Penalties imposed under sections 77(1)(a), 78 on the Appellant Company, and the penalty on the Director under section 78A are set aside. The appeals are disposed of on the above terms.
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