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2025 (3) TMI 165 - HC - GSTRejection of petitioner s claim for concessional rate of 12% on works contract services of original works executed pursuant to a contract entered with Tvl. Rail Vikas Nigam Limited - tax at 18% levied - whether the petitioner s contract with M/s. RVNL is entitled to the concession granted in terms of Sl. No. 3 (v) (a) of the notification in other words liable to tax at 12%? Relevance of definition under Indian Railway Act 1989 - HELD THAT - It may be relevant to note that Railways has not been defined under the GST Act. Thus the expression railway employed in the above notification ought to be understood applying the common parlance test. It is also relevant to keep in view that a definition contained in a particular enactment cannot be incorporated into another enactment unless the enactments are pari materia. The definition in one statute may not afford a guide to construction of the same words or expressions in another statute unless the same are pari materia legislations or specifically provided or incorporated in the other statute - The impugned order insofar as it looks to the definition of Railways as defined under the Indian Railways Act to construe the scope and width of the notification is wholly misdirected. Applying the definition of Railways under Indian Railways Act 1989 - HELD THAT - On applying the definition of Railway as defined under IRA it appears that the contract between the petitioner and RVNL for doubling of track between Vanchi Maniyachchi to Nagercoil construction of roadbed minor bridges platforms buildings water and effluent treatment facilities wagon / coaching maintenance infrastructure supply of ballast installation of tracks and other electrical signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway would constitute Railway even under the definition of Indian Railways Act more particularly covered under clauses (b) (c) and (d) to Section 2(31) of the Indian Railways Act. Expression Railway under the Notification Not confined to Indian Railway - HELD THAT - If the expression railway employed in the notification were to be construed to be confined to Indian Railway in its operation it may produce results which are incongruous inasmuch as the relevant entry under the notification covers original works pertaining not only to railways but also Mono Rail and Metro Rail which is undisputedly not part of the Indian Railway. The reference to Mono Rail and Metro Rail is only to show that the object does not appear to be to grant concession under the relevant entry to the subject notification of the qua an entity instead the object / intent appears to be to extend the benefit / concession to industry / utility mentioned therein viz. Railway Metro Rail and Mono Rail. Relevance of the expression pertaining to - HELD THAT - The use of the expression pertaining to would show that the legislation intented to give an expansive meaning to the expression Railway . If we bear this in mind the contract in question for doubling of track between Vanchi Maniyachchi to Nagercoil construction of roadbed minor bridges platforms buildings water and effluent treatment facilities wagon / coaching maintenance infrastructure supply of ballast installation of tracks and other electrical signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway between the petitioner and RVNL would constitute original work pertaining to railway for the purpose of the subject notification. Exemption not to be curtailed by importing conditions - HELD THAT - The definition of Railway under the Indian Railway Act 1989 may not be relevant in construing the subject notification. In any view even applying the definition of Railway as defined under the Indian Railway Act 1989 to the contract between the petitioner and M/s. RVNL which is for doubling of track between Vanchi Maniyachchi to Nagercoil construction of roadbed minor bridges platforms buildings water and effluent treatment facilities wagon / coaching maintenance infrastructure supply of ballast installation of tracks and other electrical signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway it appears to me from the discussion supra that it would still constitute original work pertaining to Railway for the purpose of the subject notification and thus covered under Sl.No. 3 (v) (a) of the said notification. Construction that leads to Consistency - HELD THAT - It is trite law that consistency in law is as important as correctness if not greater as held in Paper Products LTO vs. Commissioner of Central Excise 1999 (8) TMI 70 - SUPREME COURT - Thus the impugned order being contrary to Appellate Advance Ruling and Advance Ruling Authorities referred above would lead to uncertainity and inconsistency which ought to be avoided. Conclusion - The contract for doubling of track between Vanchi Maniyachchi to Nagercoil construction of roadbed minor bridges platforms buildings water and effluent treatment facilities wagon / coaching maintenance infrastructure supply of ballast installation of tracks and other electrical signalling and telecommunication infrastructure in Madurai and Thiruvananthapuram Divisions of Southern Railway between the petitioner and RVNL would be covered by Notification 11 of 2017 CGST (RATE) dated 28.06.2017 as amended vide Notification No. 20/2017 dated 22.08.2017 Notification No. 8 of 2017 Integrated Tax (Rate) dated 28.06.2017 and G.O. Ms. No. 94 dated 22.8.2017 CT RE and liable to tax at 12%. The impugned orders are set aside - Petition allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issue considered was whether the petitioner's contract with Rail Vikas Nigam Limited (RVNL) was entitled to a concessional GST rate of 12% under Sl. No. 3 (v) (a) of Notification No. 11/2017, as amended, or whether it was liable to a higher rate of 18% as determined by the tax authorities. 2. ISSUE-WISE DETAILED ANALYSIS The primary issue revolved around the classification of the works contract services provided by the petitioner to RVNL and the applicable GST rate. The analysis involved several sub-issues: Relevant Legal Framework and Precedents: The petitioner relied on Notification No. 11/2017, which provided a concessional GST rate of 12% for composite supply of works contracts related to railways, including monorail and metro. The notification was amended by Notification No. 3/2019, but the petitioner argued that the amendment did not materially alter their entitlement to the concessional rate. Court's Interpretation and Reasoning: The Court examined the nature of RVNL, noting that it functions as an extended arm of the Ministry of Railways and works in tandem with Indian Railways. The Court also considered the definition of "railways" under the Indian Railways Act, 1989, and noted that the GST Act did not incorporate this definition. The Court emphasized that the term "railways" in the GST notification should be understood in its common parlance and not be restricted to Indian Railways alone. Key Evidence and Findings: The Court found that the petitioner's contract involved original works related to railways, including track doubling, construction of infrastructure, and installation of railway systems. The Court also noted that RVNL's role and operations were closely aligned with the objectives of Indian Railways, further supporting the petitioner's claim. Application of Law to Facts: The Court applied the legal framework to the facts, concluding that the petitioner's services fell within the scope of the concessional rate under the relevant notification. The Court rejected the tax authorities' reliance on the definition of "railways" under the Indian Railways Act, as it was not incorporated into the GST framework. Treatment of Competing Arguments: The Court addressed the respondents' arguments that RVNL was not directly controlled by Indian Railways and thus not eligible for the concessional rate. The Court dismissed these arguments, emphasizing that the notification's reference to "railways" was intended to cover the industry as a whole, including entities like RVNL. Conclusions: The Court concluded that the petitioner's contract with RVNL was entitled to the concessional GST rate of 12% as per the relevant notifications. 3. SIGNIFICANT HOLDINGS The Court held that the expression "railways" in the GST notification should be interpreted in its broad, common parlance sense, encompassing the entire railway industry rather than being limited to Indian Railways. The Court emphasized that exemption notifications should not be narrowly construed by importing conditions not explicitly stated. Core Principles Established: The judgment reinforced the principle that exemption notifications must be interpreted based on their plain language, without importing external definitions unless explicitly incorporated. The Court also highlighted the importance of consistency in legal interpretations across different jurisdictions. Final Determinations on Each Issue: The Court set aside the impugned orders and determined that the contract between the petitioner and RVNL was covered by the relevant notifications and entitled to a 12% GST rate. The writ petitions were disposed of accordingly, with no costs awarded.
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