WHETHER INDIAN RAILWAY IS A PERSON IN SERVICE TAX , Service Tax

[RAJESH MANGAL]

Dear all, In chhatisgarh, I have come across cases where SCN is issued to Railway as a service provider for "renting of immovable property service." Under sub-clause (zzzz) of section 65(105) of the Act, the taxable service is defined as any service provided or to be provided to any person, by any other person, in relation to renting of immovable property for use in the furtherance of business or commerce. I have come across several cases where the Railway is the service receipient and SCN is issued to service provider under different taxable services. Further in the taxable service of Transportation of Goods by Rail service upto 31.08.09 the taxable service read as under. "Taxable service means any service provided or to be provided to any person,by any other person other than Govt. Railways as defined in clause (20) of Section 2 of the Railways Act,1989, in relation to transport of goods in containers by rail, in any manner. W.e.f. 01.09.09 the amended section 65(105)(zzzp) of the Act defines the taxable service as follows: Taxable service means any service provided or to be provided to any person,by any other person ,in relation to transport of goods by rail, in any manner. This means that some how or other the CBEC & Service tax authority is of the opinion that Railway is a person & the service provided/received by the indian railway is also taxable. Kindly discuss this issues.

Regargs

CA. Rajesh Mangal

Posts / Replies

[Rama Krishana]

Yes, Indian railway is a Person beyond any doubt. They are liable to pay service tax if otherwise falling within the scope of service tax. Don't you thing this matter has been settled long ago and therefore, they are also liable to pay other taxes also wherever is applicable like Sales Tax / VAT and other local taxes. They are also liable to excise duty or customs duty. The definition of Person in Income Tax is inclusive one and covering all the person.

[DEV KUMAR KOTHARI]

With reference to observations of learned Shri Rama Krishana, I would like to mention  that definition of person under Income -tax Act is not adopted for service tax. Even under wider definition of person' under IT Act, Indian Railways is not a person as such in capacity of assessee liable to pay income-tax.

Pay Officers  Indian Railways or  any Government Departments are  considered tax deductor. In provisions relating to TDS words used are ' Any person responsible for paying...'   and the pay officer is considered as person responsible for paying the sum and deducting tax.

VAT and Sales Tax are levied by State Governments. There different expressions like dealer, registered dealer, unregistered dealer, contractor, .. etc. are used  In those case tax is tax on transaction of sale or purchase of goods by a dealer etc. Indian Railways, while purchasing goods or selling goods  may be a dealer in that context and liable to pay tax on purchases and sales. However, in my view that will not make Indian Railways as person receiving service or rendering service.

While levying service tax on some services provided by Indian Railways different expressions were used. When expression  any person  ..... rendering service is used, Indian Railways will not fall in the category of person.

My article on the subject has also been web-hosted on this website recently. Which can be referred to for further details.