2017 (10) TMI 971 - AT - Service Tax

Management, repair and maintenance - interpretation of statute - railways - Whether the appellant is required to pay Service Tax on the activity of management, repair and maintenance as defined under Section 65 (105) (zzg) of the Finance Act, 1994 for providing services to the railways? Held that - the term railway includes each and every respect of the railway including all rolling stock stations, offices, warehouses, wharves, workshops, factories, etc. - the appellant shall be entitled to benefit of the N/N. 24/2009 dated 27/07/2009 as amended by N/N. 54/2010-ST dated 21/10/2010 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is required to pay Service Tax on the activity of management, repair, and maintenance as defined under Section 65 (105) (zzg) of the Finance Act, 1994 for providing services to the railways.

Analysis:

Issue 1: Service Tax Liability on Management, Repair, and Maintenance Services
The appellant provided management, repair, and maintenance services to the railways, including maintenance of invertors in AC coaches. The appellant claimed exemption from Service Tax under Notification No.24/2009 dated 27/07/2009, as amended by Notification No.54/2010-ST dated 21/10/2010, which extended the exemption to management and repair of infrastructure projects related to railways. The Revenue contended that the exemption applied only to infrastructure projects of railways terminals, not to the repair of locomotives. The Order-in-Original confirmed a demand for Service Tax of ?81,40,479 and proposed penalties under Sections 77 & 78 of the Finance Act, 1994. The Commissioner interpreted the exemption notification to apply only to infrastructure projects related to railway terminals, not to other items. The appellant challenged this interpretation before the Tribunal.

Issue 2: Interpretation of the Definition of Railways Act, 1989
The appellant's counsel referred to the definition of "railway" under the Railways Act, 1989, which includes various components like rolling stock, stations, offices, warehouses, workshops, and more. The Tribunal considered the definition of "railway" to encompass all aspects of the railway, including infrastructure projects related to railways. Therefore, the Tribunal held that the appellant was entitled to the benefit of the exemption notification, setting aside the impugned order. The appellant was granted consequential benefits in accordance with the law.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the appellant was entitled to the benefit of the exemption notification for providing management, repair, and maintenance services to the railways. The Tribunal's decision was based on the interpretation of the definition of "railway" under the Railways Act, 1989, which included various components related to the railway infrastructure.