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2024 (5) TMI 669 - AT - Service TaxExemption provided under Sl. No. 14 of N/N. 25/2012-ST dated 20.06.2012 - modification/renovation work undertaken for existing Railway lines - The contention of the Revenue is that the modification and renovation of existing Railway lines cannot be considered as 'Original Works' and hence the services rendered are not eligible for the exemption provided under Notification No. 25/2012-ST dated 20.06.2012. HELD THAT - The 'Original Work' not only includes laying of new Railway lines, but also include all types of alterations to abandoned or damaged structures. On perusal of one of the work order No.RITES/RPO-KOL/WPDCL-STPS/Reno-P.Way/PKC-C/2014/1270 issued by RITES for renovation work, which reads as 'Renovation modification of existing Railway Track inside outside plant yard (excluding MGR Track) of Santaldih Thermal Power Station (STPS) of WBPDCL, Dist. Purulia, West Bengal . It is observed that this work squarely falls within the ambit of part (ii) of the definition of 'Original Work' which covers all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable . Accordingly, the work contract service rendered by the assessee-appellant relating to new railway lines as well as modification/renovation work of existing railway lines, both fall within the ambit of 'Original Work' and both are eligible for the benefit of exemption as provided under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012. All the four contracts are related construction of new Railway lines or renovation/modification of existing Railway Lines either for the Government or private companies. As discussed, all these services fall within the ambit of 'Original Work and eligible for the benefit of exemption as provided under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012 - the demand of Service tax of Rs. 3,96,05,317/- confirmed in the impugned order relating to Works Contract Services rendered by the assessee in respect of Railways to M/s. Haldia Energy Limited and M/s. WBPDCL, is not sustainable and accordingly, the same is set aside. Demand of Service Tax of Rs. 3,27,841/- related to Work Order No. HEL WO 1219 dated 16th May, 2015 - HELD THAT - The said work order is for Transportation and Dumping of Ash Silo to Specified Areas Inside the Plant . The said activity is an essential part of the production process and the same is not a service activity as held by this Tribunal in the case of M/S MARSHALL CORPORATION LTD., VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, KOLKATA. 2023 (7) TMI 766 - CESTAT KOLKATA . Thus, the demand on this count is not sustainable. Service tax on activity of Transportation and Dumping of Ash Silo to Specified Areas Inside the Plant - HELD THAT - It is observed that the appellant/assessee has collected service tax under the category of works contract service and availed 60% abatement. Later, they realized that their activity was not liable to service tax - the activity of Transportation and Dumping of Ash Silo to Specified Areas Inside the Plant is not liable to service tax. Thus, Service Tax of Rs. 3,27,841/-, confirmed in the impugned order is not sustainable and accordingly, the same is set aside. Demand related to addition of free issue materials in the assessable value for the purpose of demanding service tax - HELD THAT - The ld. adjudicating authority has dropped the demand by relying upon the decision of the Hon'ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. 2018 (2) TMI 1325 - SUPREME COURT , wherein it has been held that the value of free supply materials is not includable in the gross value for the purpose of demanding service tax - the findings of the ld. adjudicating authority on this count is agreed upon and accordingly, the dropping of this demand in the impugned order is upheld. Availability of abatement @60% for some of the works contract services rendered by the assessee - HELD THAT - During the course of hearing the assessee produced evidence to the effect that all these work orders are supplementary to earlier work orders. On perusal the evidence submitted by the assessee which clearly reveals that all these work orders are supplementary to earlier work orders. Accordingly, the ld. Adjudicating authority has rightly extended 60% abatement as provided under Rule 2A(ii) of Service Tax Determination of Value Rules) 2006. Thus, the dropping of the demand by the ld. adjudicating authority on this count is uphold. The demand of service tax of Rs. 3,99,33,158/- confirmed in the impugned order is set aside - Dropping of the demand of Rs.1,68,64,976/- by the ld. adjudicating authority is upheld - the appeal filed by the assessee is allowed and the appeal filed by the Department is rejected.
Issues Involved:
1. Confirmation of demand of Rs. 3,99,33,158/-. 2. Dropping of demand of Rs. 1,68,64,976/-. 3. Demand of Service Tax of Rs. 3,27,841/-. Summary: Issue 1: Confirmation of demand of Rs. 3,99,33,158/- The assessee argued that the service tax of Rs. 3,96,05,317/- related to Works Contract Services for 'Railways' is exempted u/s Notification No. 25/2012-ST dated 20.06.2012. The Tribunal observed that services for laying railway lines are exempted under this notification, including those for private companies, as per Mahendra Kumar Anchalia v Commissioner of CGST&CX, Kolkata. The Revenue contended that only 'Original Work' qualifies for exemption, but the Tribunal held that renovation and modification also fall under 'Original Work' as per Explanation 1 to Rule 2A(ii) of the Service Tax Determination of Value Rules 2006. Thus, the demand of Rs. 3,96,05,317/- was set aside. Issue 2: Dropping of demand of Rs. 1,68,64,976/- The dropped demand of Rs. 1,32,99,117/- was related to the addition of free issue materials in the assessable value, which the adjudicating authority dropped based on the Supreme Court's decision in Commissioner of Service Tax vs Bhayana Builders Pvt. Ltd. The remaining Rs. 35,65,859/- was dropped as the work orders were supplementary to earlier ones, qualifying for 60% abatement under Rule 2A(ii) of Service Tax Determination of Value Rules 2006. The Tribunal upheld the dropping of the entire demand. Issue 3: Demand of Service Tax of Rs. 3,27,841/- This demand related to the work order for 'Transportation and Dumping of Ash Silo to Specified Areas Inside the Plant.' The Tribunal, referencing Marshall Corporation Ltd. v Commissioner of C.G.S.T. and C.Ex., Kolkata, held this activity as part of the production process and not a 'service activity,' thus not liable for service tax. The collected service tax of Rs. 1,78,980/- was deposited and indicated in the return. The Tribunal set aside the demand of Rs. 3,27,841/-. Order: (i) The demand of service tax of Rs. 3,99,33,158/- is set aside. (ii) Dropping of the demand of Rs. 1,68,64,976/- is upheld. (iii) The appeal filed by the assessee is allowed, and the appeal filed by the Department is rejected. (Order pronounced in the open court on 10.05.2024)
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