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TMI Blog2016 (7) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... order-in-original dated 28th November, 2014 passed by respondent no. 2. 4. The petitioner is a company incorporated under the Indian Companies Act, 1956, having registered office at the address mentioned in the cause title. The first respondent is Union of India and the second respondent is the Commissioner of Central Excise, Customs and Service Tax, Nagpur. The petitioner is holding Service Tax Registration No. AACCD1376KST001 under the categories of "Transportation of Goods by Roads" and "Site Formation and Clearance, Excavation and Earth Moving and Demolition Service" 5. The petitioner is inter alia engaged in the business of:- (i) Construction of roads for NHAI (National Highway Authority of India), CPWD (Central Public Works Department) and NMC (Nagpur Municipal Corporation). (ii) Construction of runways for Airport Authority of India Ltd. (iii) Strengthening renewal of roads. (iv) Improving and surfacing of runways. (v) Site preparation, excavation for further construction of roads either on its own behalf or for the clients having contracts for construction of roads. 6. The present dispute pertains to (i) repair and maintenance of roads; (ii) repair and mainten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roads, which were totally exempt from service tax by Notification No. 17 of 2005-Service Tax, dated 7th June, 2005. (iii) Service tax was demanded on the gross receipts without allowing the cum-tax benefit in terms of section 67(2) of the Act. (iv) The Board's circular was prospective in effect and based on such circular, demand of service tax could not be raised for the past period. (v) The Board's circular dated 24th February, 2009 being an oppressive circular, had only prospective effect. (vi) The extended period of limitation under proviso to section 73(1) of the Act could not be invoked because the Department itself was in doubt about the taxability of the various activities in relation to road as was apparent from the Board's circular which was issued on a representation made by the Nasik Commissionerate and because the details of receipts made in respect of the services provided were reflected in the balance sheet of the petitioner's company which was a public document. (vii) Penalties under sections 76 and 78 of the Act could not be simultaneously imposed for the period in dispute. 12. However, without appreciating the submissions made by the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July, 2009 (both days inclusive) ....." "SECTION 98. Special provision for exemption in certain cases relating to management, etc., of non- commercial Government buildings. - (1) Notwithstanding anything contained in section 66, no service tax shall be levied or collected in respect of management, maintenance or repair of non- commercial Government buildings, during the period on and from the 16th day of June, 2005 till the date on which section 66B comes into force ....." 18. The aforesaid stay application came up for hearing before the appellate tribunal on 30th July, 2012. The petitioner appeared for hearing and submitted that it is not liable to pay service tax. 19. However, after hearing both sides, the appellate tribunal, vide Stay Order No. S/1059/12/CSTB/C-II dated 30th July, 2012 directed the petitioners to deposit a sum of Rs. 3 crores. 20. Being aggrieved and dissatisfied by Order No.S/1059/12/CSTB/C-I dated 30th July, 2012 in Appeal No.ST/26/12 passed by the Appellate Tribunal, the petitioner filed an appeal before this court. This court, vide order dated 29th November, 2012 quashed and set aside the stay order and directed the appellate tribunal to hear the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the activities pertaining to "runway" will not be entitled for exemption in terms of section 97 and 98 of the Finance Act is sustainable in law? (b) Whether in the facts and circumstances of the case, the activity of repair and maintenance of runway undertaken by the petitioners will be taxable under "management, maintenance or repair service, even when it is specifically excluded from the scope of "commercial or industrial construction service"? 27. A memorandum vide F. No. IV (16) 30-192/ST/Adj./ 2010/ 6195-6196 dated 2nd May, 2014 was issued by the Superintendent to the petitioner to submit written submissions and appear for personal hearing. The petitioner, vide letter dated 20th May, 2014, informed respondent no. 2 that the appeal filed by the petitioner against the appellate tribunal's order dated 29th May, 2013 is pending before this court and therefore, requested to await the order of this court. 28. However, respondent no. 2, without even awaiting for the decision of this court, passed the impugned order dated 28th November, 2014 upholding the demand for Rs. 5,34,70,601/-. Respondent no. 2, however, granted the following reliefs to the petitioner:- (a) Benefit of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial complex service" and "site formation and excavation service" as defined under the Finance Act, 1994. The service provided by the service provider, which is sought to be taxed is the core of any show cause notice. The petitioner submits that the activity undertaken by the petitioner does not fall under taxable head of "management, maintenance and repair service", "construction of commercial complex service" and "site formation and excavation service" as defined under the Finance Act, 1994. The show cause notice was, therefore, liable to be dropped. Mr.Sridharan submits that it is well settled that the assessee must be put to notice as to the exact nature of the contravention for which he is liable. Mr. Sridharan submits that once the show cause notice does not provide detailed breakup on which the demand is based, then, even the impugned order, which fails to indicate the broad parameters of the demand and the details thereof, must stand vitiated in law. The entire proceedings, therefore, deserve to be quashed and set aside. 34. Mr. Sridharan submits that the second respondent has excluded the portion, which pertains to repair and maintenance of roads and confirmed the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity of repair and maintenance of runways referred to in the present case involves the runways, which means the strip, where the aircraft lands or takes off. Taxiways are road on which the buses or any other vehicle ply within the airport premises. Apron roads are roads wherein the aircraft moves to the parking area after landing/take off. The method of construction/specification in terms of thickness of the layers and other parameters for all the three portions, namely, runway, taxiway and apron road are the same. Mr. Sridharan submits that upon the show cause dated 14th October, 2010, the initial order-in-original dated 28th October, 2011 was passed confirming the demand. That order was challenged before the CESTAT, Mumbai. During the pendency of the appeal before the CESTAT, Finance Act, 2012 was enacted. By this enactment, sections 97 and 98 have been inserted in Chapter V of the Finance Act, 1994. Section 97 of the Finance Act, 1994 provided for retrospective exemption to activity of management, maintenance and repairs of road with effect from 16th June, 2005. Similarly, section 98 of the Finance Act, 1994 provided for retrospective exemption to activity of management, mainte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n another taxable clause. Mr. Sridharan submits that clause 65(25b) of the Finance Act, 1994 inter alia relating to maintenance or management of immovable property is demonstrative of the fact that repair/maintenance is mentioned in both clauses. Thus, rate of tax is otherwise the same for both clauses. Determination of value and all other provisions of Chapter V of the Finance Act, 1994 is identical to both these clauses. If specific exclusion has been granted to the activity of repair and maintenance of roads and airport from the definition of commercial or industrial construction service under section 65(25b) of the Finance Act, 1994, it would be illogical to suggest that it is still covered under taxable head "maintenance or repair service". This would render the exclusion granted to the activity of repair and maintenance of roads under taxable head of "commercial or industrial construction service" redundant. 41. Mr. Sridharan submits that it could never be the intention of the legislature to grant exclusion under one head and to tax the same activity under different head. The legislature never intends to give or confer by one hand and take the same away by the other. Once an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, motor car, bus, aircraft etc. In these circumstances, runway cannot be left out or excluded from this broad concept of road. Mr. Sridharan has relied upon a judgment of a Division Bench of this court in the case of Union of India vs. Authority under the Minimum Wages Act AIR 1969 Bom. 380. 44. It is then contended by Mr. Sridharan that runway is part of airport only. The benefit of section 98, which provides retrospective exemption to repair/maintenance services provided to non-commercial Government buildings, has to be extended to runways of airports as well. Mr. Sridharan would submit that runways, taxiways and apron ways/apron taxi tracks are all parts of building of airport. The building includes not only the land appurtenant thereto but the civil structures built on such appurtenant land. Therefore, what applies to repair and maintenance of a non-commercial government building equally applies to the activity carried out for preserving the structures. Mr. Sridharan submits that airports do not carry on any commercial activity. In any case, later part of the demand pertains to defence airports at Yelakhana and Bidar which are exclusively used for defence operations. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay from the road and did not qualify for exemption, then, it is evident that it will not fall under the category of site formation, excavation service site formation. Even if the activity is recorded as site formation, it is not taxable under Notification No. 17/2005-ST. Mr. Sridharan submits that the Commissioner has not excluded the value of material. The tax is on service. The value of the material is not liable to service tax and should have been excluded. It is incorrect to hold that no evidence is produced. Mr. Sridharan submits that at least for this purpose, the matter should be remanded back to the commissioner. 47. Mr. Sridharan submits that the demand is barred by limitation. The issue in the present case involves interpretation of law. The petitioner/appellant was of the bonafide view that they are not liable to pay service tax. The customers are also Government. The service tax being an indirect tax and eventually the liability is of the customers, then, all the more penalty was not leviable. For all these reasons, Mr. Sridharan would submit that the penalties deserve to be waived. 48. In support of the above contentions, Mr. Sridharan has relied upon the following d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also revealed that the petitioner is providing services such as repairs and strengthening of roads, improvement and resurfacing of runways, periodical renewal of National Highways etc. and construction of toll plazas to said agencies and receiving crores of rupees for this purpose. 52. After referring to the definition of the above services, as appearing in the Finance Act, 1994, it was alleged that the records of the petitioner for the years 2005-06 to 2009-10 were called for by letters and which were replied by the petitioner/assessee. On scrutiny of all the materials produced, including the statements of the authorised signatory, it is alleged that the activity of strengthening, repairs and black topping of roads is undertaken on the already existing road. It also appears that the activity of strengthening of road is altogether distinct from that of building or construction of a new road. Further, it appears from the definition of the "management, maintenance or repair service" that the work of strengthening or repairs of road amounts to providing of service in relation to management, maintenance or repair of properties. The notifications exempting the services of maintenance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed not advert to this reply any further for the simple reason that the contentions raised therein based on some judgments of courts of law have already been referred by us hereinabove. In the order passed on 28th October, 2011, the adjudicating authority reproduced the allegations in the show cause notice and the reply thereto in para 14 of the order and held that the main issues to be decided are whether the activities of the petitioner are classifiable and taxable under the category of site formation, maintenance or repair of property and construction of complex and whether the demand is hit by limitation. Finally, whether the petitioner is liable for payment of interest under section 75 of the Finance Act, 1994. 56. The order refers to the wording in Notification No. 17 of 2005 dated 16th June, 2005, which exempts the site formation and clearance, excavation and earthmoving and demolition, any such other and similar activities referred to in sub clause (zzza) of clause (105) of section 65 of the Finance Act, 1994 provided to any person by any other person in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams, ports or other por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance undertaken by us during the year 2008-09 and 2009-10 for Nagpur-Hyderabad section was a composite contract involving execution of reconstruction of part of damaged road and other ancillary activities to maintain smooth flow of traffic. That the contract for periodical renewal involved a wide scope of work including repairs, renewal, making good damages caused to the road. That they had undertaken the work of repairs of runway at Air Force Station at Bidar and also of strengthening and resurfacing of taxi tracks at Air force Station at Yelahanka. iv. Thus even STBT (Strengthening and Black Topping) was an activity including strengthening of road which clearly falls under the category A (III) of the circular no. 110/4/2009-S.T., dated 23-2-2009 as taxable being maintenance. The circular is very vivid and is binding on the officers of revenue. In view of the same I find that the submissions of the noticee as regards to taxability are not at all tenable and rejected. 15.1. In view of the above findings, I hold that the demand of Rs. 102572125/- raised under show cause notice F. No. IV(16)30-192/ST/ADJ/2010/24872, dated 14-10-2010 is recoverable from the notice. 15.2. The sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty, the initial order did not uphold the claim and the contentions of the petitioner. 60. This order was challenged in appeal before the CESTAT, West Zonal Bench, Mumbai. Application for stay was also made and from the record, it appears that an order was passed on the stay application on 30th July, 2012 directing deposit of Rs. 3 crores. That was on the prima facie view as reflected from that order. 61. This order on the stay application was challenged before this court in Central Excise Appeal (L) No. 137 of 2012 and on 29th November, 2012, this appeal was allowed and the interim order of the tribunal was set aside. 62. Thereafter, Appeal No. ST/26/2012, which challenged the order passed by the Commissioner of Central Excise, Nagpur on 28th October, 2011 was heard finally. The tribunal noted the rival contentions and in para 5.1 held that the petitioner/appellant has undertaken maintenance/repair or roads in addition to repair/maintenance of runways. Wide Notification No. 24/2009, maintenance/repair of roads was exempted from the levy of service tax and such exemption was given retrospective effect vide section 75 of the Finance Act, 2012 for the period starting from 16th Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it in clause (b) of section 2 of the Airports Authority of India Act, 1994 (55 of 1994)." 67. Then, reliance is placed upon the definition of the "airport" as appearing in section 2(b) of the Airports Authority of India Act, 1994. that definition reads as under:- "2(b) "airport" means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger facilities and includes aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934 (22 of 1934)." 68. The argument is that the charging section applies both the clauses, namely section 65(64) and section 65(105) uniformly. Mr. Sridharan submits that repairs of road and airport is specifically excluded from the definition of industrial construction. Hence, the same cannot be taxed under another general category, namely, "management, maintenance or repair service". Specific exclusion from main taxable clause will prevail over a general description in another taxable clause. In that regard, Mr. Sridharan has relied upon section 65(25b) of the finance Act, 1994. The same reads as under:- "65(25b) "commercial or industrial construction" means - (a) construction of a new building o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th or engaged or to be engaged primarily in commerce or industry, or work intended for commerce or industry. From that service, the legislature excluded services provided in respect of roads, airports, transport terminals etc. The reason is obvious because the section contains a definition. The service provided could be for maintenance of utilities. Such maintenance may also include repairs. Therefore, the legislature thought it fit to bring it within maintenance or repair service under section 65(64) and while doing so, it firstly defined "management, maintenance or repair service" to mean any service provided by any person under a contract or an agreement for a manufacturer or any person authorised by him in relation to management of properties, whether immovable or not, maintenance or repair of properties, whether immovable or not or maintenance or repair including reconditioning on restoration, or servicing of any goods, excluding a motor vehicle and also substituted it by the Finance Act, 2006 with effect from 1st May, 2006. It also substituted the Explanation below section 65(64) with effect from 15th May, 2008 to state that for the purpose of section 65(64) "goods" includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys a very wide latitude and discretion. It need not tax everything to tax something. It is not for the court to probe this part of the legislative action even if it finds that some other way or measure could have been thought of. Mr. Sridharan was unable to point out any legal prohibition either. In such circumstances, we do not think that the submission has any merit. The whole argument proceeds on the logic of the legislature in excluding from one definition the aspect of maintenance or repair and including it in some other definition. In that regard, we find that commercial or industrial construction service is defined in section 65(25b) and in its wisdom, the legislature thought the services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dam would not be necessarily commercial or industrial construction and in any event repair, alteration, renovation, restoration of such utility should be excluded from the purview of the definition of the term "commercial or Industrial construction service". By this, there is no prohibition for bringing it in another category. We do not think that the definitions as carved out would make any provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marked and therefore, no attempt should be made to evolve an arguable principle but the question must be decided at large by the Judge concerned on facts of each case. 72. It is in that context, the Hon'ble Supreme Court, after reproducing both, section 162 of the Cr. P. C. and section 145 of the Indian Evidence Act held that the object of the legislature throughout has been to include the statement of the witnesses made before police during the investigation for being used at the trial for any purpose and the amendments from time to time were only intended to make clear the object and to dispel cloud cast on such intention. It is in that regard the Hon'ble Supreme Court of India made the observations relied upon by Mr. Sridharan. Therefore, the Hon'ble Supreme Court of India held in para 14 that unless the words are clear, the court should not so construe the proviso as to attribute the intention of legislature to give with one hand and take away with another. A sincere attempt should be made to reconcile the enacting clause and the proviso and to avoid repugnancy between the two. But, if the words are clear, plain and unambiguous, then, we do not think how this princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was noted. Thereafter, the argument of the departmental representative also came to be considered. The tribunal held that services rendered by the appellant before it of drawing, processing and forwarding of samples is integral to the testing of those samples. One of the orders impugned before the tribunal also noted that drawing of test sample may form part of test analysis. Therefore, the tribunal held that once they are held to be so integral, then, in the factual situation and the broad scope of the definition brings these services rendered by collection centre within the scope of "technical testing and analysis". Once there is a specific entry for an item in the tax code, the same cannot be taken out and goods cannot be taxed under any other entry if they are covered by such specific entry. The Revenue, in that case, was seeking to discard the specific entry and to bring the services of the appellant before the tribunal under very general entry only because under the specific entry, no tax was payable. It is this approach which was held to be contrary to the scheme of the legislation. It is in that context that the principle relied upon by Mr. Sridharan has been pressed into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slature granting exemption from tax as and by way of abundant caution. The legislature has clearly held that the service falling within the purview of section 97 can be brought to tax. It is, therefore, clear that exemption of those services from tax has been granted by exercising a distinct power vesting in the Central Government. It is that distinct power which has been conferred and envisaged in the Central Government by the enactment. Once we do not think that the principle and the maxim relied upon has any application, for that reason, we need not refer to the Principles of Statutory Interpretation by Justice G. P. Singh, Seventh Edition page 66. 78. The principle of presence of an exemption notification and that covering a composite contract by itself is not indicative that the services or contracts referred therein were taxable, also cannot be relied upon. The levy of service tax was itself found to be nonexistent. Therefore, question of exemption would not arise. In other words, what could be brought to tax alone can be exempted from it or the levy. If that was not taxable at all or from inception, then, there is no question of grant of any exemption therefrom. That is a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry No. 7 in part I of the Schedule to the Minimum Wages Act, 1948 and therefore, he had jurisdiction to entertain and try the application. He directed that the application should proceed on merits. 82. The argument was that respondent no. 2 to 201 before this court were in employment on the construction or maintenance of roads. Construction or maintenance of a railway track is not covered by expression "construction or maintenance of roads". Therefore, the Division Bench was required to construe as to whether the term or word "road" would include maintenance of railway track. One must not forget that the Division Bench was construing and interpreting a legislation like the Minimum Wages Act, 1948. After analyzing the provisions of this Act, in para 4, the Bench proceeded to consider the primary contention. If the road can be defined to mean as line of communication between places for use of foot passengers, riders and vehicles and the expression "road-bed" is described to mean "foundation, structure of a railway", then, there is no reason why the railway should not mean a road or a line of communication between places for use of vehicles. Once a railway engine or wagon or compartm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Commissioner of Central Excise and Customs, Kerala vs. M/s. Larsen and Toubrao Ltd. Civil Appeal No. 6770 of 2004 decided on 20th August, 2015. There, the issue was whether service tax can be levied on individual works contracts prior to the introduction on 1st June, 2007. The Hon'ble Supreme Court concluded that a works contract is a separate species of contract distinct from contracts for services simpliciter recognized by the world of commerce and law as such and have to be taxed separately. It is in the context of such essential controversy that all observations and conclusions rendered from paras 24 to 29, relied upon by Mr. Sridharan must be seen. Even para 43, relied upon by Mr. Sridharan of this judgment cannot be read out of context and in isolation. If there is no charge or machinery to levy and recover tax on individual or composite works contract, then, none of the arguments of the Revenue noted by the Hon'ble Supreme Court could have been accepted. 84. Mr. Sridharan relied upon some English judgments, but those carry forward the interpretation placed on the word "rail road" and as a part and parcel of broad category of "road". If we have distinguished the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the judgment in the case of Commissioner of Central Excise and Customs, Kerala vs. Larsen and Toubro (supra) cannot be accepted for the reason it is distinguishable on facts. 88. We do not think that the fifth, sixth and seventh submissions, as appearing in that order in the written submissions need detain us. These are based on findings of fact. Once they are relatable to the main contentions and in any event the tax demand as far as site formation and excavation services is concerned has been upheld by observing and holding that it was not exempted under Notification No. 17/2005-ST bearing in mind the site or place where the services are rendered but its location. That being at a far of place, on facts, the benefit of this notification was denied. We do not think that the tribunal was in error in upholding the demand. 89. Even on the point of limitation and no penalties are imposable, we are of the view that there was never any doubt about the provisions and the nature of the services. We do not think, therefore, that appellant can assail or challenge the findings on the point of limitation and imposition of penalty. 90. As a result of the above discussion, we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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