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TMI Blog2023 (6) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.7.2002 with the Ministry of Railways, Government of Maharashtra, Goa and Kerala for construction of a new Broad Gauge Railway Line between Mangalore and Roha and it was allowing Indian Railways to use the said Railways Lines including signals and systems for transportation of Goods and passengers between Roha and Mangalore. It was receiving consideration for use of assets in terms of apportionment of revenue for such usage of its infrastructure facilities including railways tracks in accordance with agreement. It was further noticed by the department that transportation of goods and passengers was provided by Indian Railways and not by the appellant and collection of revenue was done by Indian Railways only that was being apportioned by stake holders, namely, participating State Governments and Indian Railways and the same was nothing but charges paid for allowing Indian Railways to use infrastructure of the appellant that is classifiable under 'Business Support Service' taxable under Section 66B(44) of Finance Act for the period on or after 1.7.2012 and under Section 65(104c) read with Section 105 (zzzq) of the Finance Act, 1944 for the prior period. Two show cause notices were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributed between Centre and State Governments does not warrant differential treatment to the Appellant under the Act for the reason that in actuality the petitioner is a limited company. 5. In response to such submissions, learned Counsel for the appellant Shri Chirag Shetty submitted that the issue is no more res integra in view of the decision Mudra Ports & Special Economic Zone Ltd. and Bharuch Dahej Railway Co.Ltd. as well as M/s. Krishnapatnam Railway Company Ltd. reported in 2019-TIOL-1175- CESTAT-DEL and the fact that the respondent department has filed appeal before the Hon'ble Supreme Court that has been admitted for hearing would not make any difference since the ratio decided therein are binding precedents as has been held by the Hon'ble Supreme Court in Kunhayammed vs. State of Kerala, AIR 2000 SC 2587 and Eknath Shankarrao Mukkaar vs.State of Maharashtra, AIR 1977 SC 1177. 6. We find that it was held in Kunhayammed and Eknath Shankarrao Mukkaar decisions that though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put in jeopardy. As could be seen from Kunhayammed case, which is the leading decision in this field, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: "(2) Nothing in clause (1) shall prevent the Union from imposing, or authorizing the imposition of, any tax to such extent, if any, as Parliament may by law provide in respect of a trade or business of any kind carried on by, or on behalf of, the government of a State or any operations connected therewith, or any property used or occupied for the purposes of such trade or business, or any income accruing or arising in connection therewith." (Underlined to emphasise) 10. A conjoined reading of the provisions would clearly indicate that imposition of tax by the Union on the State is not prohibited but the same is not permitted even on the subjects in which States are interested or States are having any interest, unless President of India makes a prior recommendation and Parliament by law provide for such imposition of tax on any specific trade or business being carried on behalf of Government of a State or any operation connected with it. This would imply that general taxation law would not be applicable to the State or to its government or agencies in which States are interested unless Parliament makes a special law in respect of trade or business of any kind and such law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are not two separate entities. He strengthens his argument by referring to the clauses of the agreement concerning transfer of assets to the Railways soon after cost is recovered by the respective participating Governments, through apportionment of revenue that is solely collected by Indian Railways and therefore, the allegation itself in the show cause notice that 'working agreement' is nothing but arrangements for payment of consideration for allowing utilization of infrastructure facilities itself is unsustainable in law and facts. 13. Per contra, in response to the submissions on this aspect, Learned AR for the revenue department Shri Nitin M. Tagade submitted that both Appellant KRCL and India Railways are two different persons not only from the point of view of charging of service tax but also they are distinct units having separate independent logo, staff and infrastructure having separate annual financial reports and Managing Director of KRCL having entered into working agreement with Secretary Indian Railway cannot be considered as one unit and therefore, the methodology adopted for apportionment of collection, at par with other zonal railways cannot make the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... railway services passing through those participating states would not suffer due to administrative, finances and other constraints. Apart from this moto, creation of the Appellant company for any other purpose is not apparently visible from the work agreement or relied upon documents on which duty demand is based. There is not a whisper of word in the text of both the agreements regarding any profit sharing or payment to the participating units of the company, apart from certain recoveries of expenditure incurred by four States and the railway company and that ultimately assets would go to the railway company upon meeting of expenditure incurred in the project. This being facts on record, we are of the considered view that there is no flow of 'consideration' to the appellant company and to the Indian Railway even as a separate unit so as to subject it to an independent entity under the category of service. Moreover, Indian Railways is not a separate unit that of the appellant company since it is 'deemed owner' and a part of it having larger share during the relevant period for which show cause notice was issued. Therefore, the demand of service tax on this score on the appellant co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 issued by the Board, that has been referred by the appellant. 18. Having regard to the submissions on these issues, we would like to restrict our discussions to the point that both judgements cited by the respondent department were on infrastructural support service being provided by the assessee which were covered under explanation to Section 65(104c) of the Finance Act, 1994 that has undergone change with effect from 1.7.2012 and made taxable under Section 65B(44) of the Finance Act, 1994 that reads as hereunder:- "Support Services of Business or Commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation.-For the purposes of this clause, the expression "infrastructural support services" includes providing of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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