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TMI Blog2023 (9) TMI 1377X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the Appellant has provided Works Contract Service in respect Railways, Sub-Contract Works under Works Contract Service in respect of Railways and Maintenance or Repair of the above contracts, but not paid appropriate service tax on the same, an investigation was initiated by DGCEI, Kolkata Zonal Unit. On the basis of that investigation, a Show Cause Notice dated 24.10.2017 was issued to the Appellant demanding service tax of Rs.4,91,53,613/- including Cess. The Notice also demanded interest and penalties under sections 77 and 78 of the Finance Act, 1994. The Notice was adjudicated by Commissioner CGST & CX, Kolkata North, vide Order-in- Original dated 30.11.2018, wherein the demand of service tax along with Cess amounting to Rs.4,91,31,087/- was confirmed along with interest and penalty and the remaining demand was dropped. Aggrieved against the impugned order, the Appellant has filed the present appeal. The Director of the Company has filed appeal against imposition of penalty on him under Section 78A of the Finance Act, 1994. 3. In their submissions, the Appellants summarized and tabulated the demands confirmed in the impugned order as under: Issue Nature Tax Demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property, service tax is payable on 60% of the total amount charged for works contract. In case of M/s Rites (Haldia) and M/s Rites (Chandrapura), the Appellant is providing repair and maintenance service of signaling & telecommunication system which is an immovable property. Accordingly, the appellant would be liable to pay tax on 60% of the total amount and not 70% as calculated by the department. M/s Bhushan Steel Limited Abatement benefit has been denied completely on the ground that no materials were supplied by the Appellant. The Appellant submits that they have supplied material while providing this service and accordingly, the same would be considered as Works Contract Service. The appellant submits that they are discharging applicable State VAT on such works awarded, which is deducted at source under State VAT Act by the parties. In support of this claim, they have enclosed VAT TDS certificate. Accordingly, they contended that the work in question would be covered under the head 'works contract service' and the appellant would be liable to pay tax @ 60% in term of Valuation Rules as per the explanation provided. M/s DVC Mejia In this case, Opening Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged and collected by the appellant from the above parties as they were under impression the every service provided in relation to railways are exempted 2. In case of Rites Chandrapura and Rites Haldia, service portion has been considered 70% of the total amount instead of 60%. As the appellant provided works contract service in relation immovable property, service tax is payable on 60% of the total amount in term of Rule 2A of the Service Tax (Determination of Valuation) Rules, 2006 3. In case of Bhusan Steel, valuation benefit has been denied on the basis that material is provide. The appellant would like to submit that the material has been provided same can be evident from the work order. Accordingly, the service tax is payable on 60% of the total amount in term of Rule 2A of the Service Tax (Determination of Valuation) Rules, 2006 4. In case of DVC (Mejia), opening balance shown in ledger has also been considered whereas service tax is payable on teh service provided or to be provided during the material period 6. Service tax amounting to Rs. 18,98,620/-was confirmed under reverse charge mechanism under the category of "Goods Transport Agency Service", "Legal Consultan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16/- and Rs.3,899/- is liable to be reduced on account of this. 8. In view of the above submissions, the Appellant prayed for setting aside the demands as discussed above and allow their appeal. 9. The Ld. A.R. reiterated the findings in the impugned order. 10. We observe that service tax including Cess has been confirmed under the following categories in the impugned order. (i) Work Contract Service - Rs. 3,43,31,013 (ii) Erection, Installation and Commissioning Service - Rs.68,80,060 (iii) Repair and Maintenance Service - Rs.60,21,394/- (iv) As recipient of service under RCM - Rs.18,98,620/- 11. In respect of the demands confirmed under Works Contract services including sub-contracts in respect of Railways, mentioned at Sl No. (i) and (ii) in Para 10 above, we observe that the said services are exempted by Notification No.25/2012. The department has interpreted the word "Railways" in the aforesaid notification and restricted it's meaning to cover only "Railways meant for public carriage of passengers or goods". We observe that there is no such restriction available in the Notification. A plain reading of the Notification reveals that the exemption is available to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No (i) and (ii) supra in Para 10 are not sustainable. 12. In respect of the confirmed demand of Rs.60,21,394/- on repair and maintenance service provided to Railways, we observe that the Appellant has already paid service tax amounting to Rs.45,51,838/- along with interest thereon. For the balance tax of Rs. 14.69,556/-, they stated that they are not liable to pay the tax, as the abatement benefits as provided under Rule 2A of Service Tax (Determination of Value) Rules, 2006 has not been properly considered in respect of the parties M/s Rites (Haldia) and M/s Rites (Chandrapura). The abatement has been completely denied on the service provided to M/s Bhushan Steel Limited. 12.1. M/s Rites (Haldia) and M/s Rites (Chandrapura) We observe that in this case, the Appellant has provided Works contract service with respect to repair and maintenance of an immovable property. In such cases, service tax is payable on 60% of the total amount charged for works contract. In case of M/s Rites (Haldia) and M/s Rites (Chandrapura), the appellant is providing repair and maintenance service of signaling & telecommunication system which is an immovable property. Accordingly, we hold that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mainly due to wrong adoption of effective rate of RCM, incorrect abatement given to GTA service and incorrect adoption of rate of service tax. We agree with the calculation submitted by the Appellant mentioned in Paras 6, 7.1, 7.2 and 7.3 supra . Accordingly, we hold that the balance tax of Rs.76,148/- is not sustainable and therefore, we set aside the same. 14. In respect of the demands confirmed, we observe that the Appellant has already paid the service tax along with interest and the same has been appropriated in the impugned order. There is no evidence brought on record to establish suppression of fact with an intention to evade payment of tax. Accordingly, we hold that no penalty imposable under section 78 of the Finance Act, 1994 and we set aside the same. No penalty imposable under Section 77(1)(a) of the Finance Act, 1994 and we set aside the same. There is no evidence available to implicate the Director of the Firm in non payment of service tax. As all the demands confirmed in this order has already been paid along with interest and the sane has already been appropriated in the impugned order, the penalty imposed on the Director under section 78A of the Finance Act, 19 ..... 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