2023 (12) TMI 782 - AT - Service Tax

Refund of Service tax - Commissioner (Appeals) committed an error while interpreting Entry No. 14 of the exemption notification - HELD THAT - A perusal of Entry No. 14 of the exemption notification leaves no manner of doubt that services by way of construction, erectioning, commissioning or installation of original works pertaining to Metro are exempted. Thus, even if the appellant was not providing such services directly to Delhi Metro, but to its foreign entity, it would not mean that the appellant had not provided services to Delhi Metro. The Commissioner (Appeals) also proceeded to hold that machining of rails cannot be treated as providing service by way of commissioning or installation of original works pertaining to metro. It is not possible to accept this finding. The Project Office of V.V.S. had imported rail, rail fittings, crossing and other material which were supplied to the appellant for machining and grinding after which they were sent to the Delhi Metro for laying of railway tracks. Such services would clearly fall under commissioning or installation of original works. Commissioning would means to bring something newly produced such as a factory or machine into working condition. This is what was carried out by the appellant. The work carried out by the appellant was also necessary without which the railway tracks could not have been supplied as per the technical specifications. The appellant was clearly exempted from payment of service tax under Entry No. 14 of the exemption notification. The adjudicating authority was justified in granting refund - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the refund claim filed by the appellant, the interpretation of Entry No. 14 of the exemption notification, and whether the services provided by the appellant qualify for exemption under the said notification.

Refund Claim:
The appellant, engaged in various industrial activities, filed a refund claim for service tax paid initially but later found exempted under a specific notification. The Assistant Commissioner allowed the refund after verifying that no CENVAT credit was taken and that the service tax payment was genuine. The Commissioner (Appeals) set aside this order, leading to an appeal.

Interpretation of Entry No. 14:
The dispute centers on whether the services provided by the appellant, namely machining of rails/crossings, qualify for exemption under Entry No. 14 of the exemption notification. The Commissioner (Appeals) denied the refund, stating that the services were only part of the commissioning or installation activity, not direct services to Delhi Metro. The appellant argued that the machining of rails amounted to commissioning or installation of original work pertaining to Metro, thus qualifying for exemption.

Judgment:
The Tribunal held that the appellant's services were integral to the commissioning and installation of original works pertaining to Metro, as they were necessary for laying railway tracks as per technical specifications. The Tribunal disagreed with the Commissioner (Appeals)' interpretation and concluded that the appellant was entitled to exemption under Entry No. 14 of the exemption notification. Therefore, the order of the Commissioner (Appeals) was set aside, and the appeal was allowed.