9911796707
TMI Blog2024 (5) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction/renovation of railway lines, but not paid service tax. Accordingly, officers of the DGCEI initiated investigation against the assessee and as a result of the investigation issued a Show Cause Notice dated 18.09.2017 demanding service tax of Rs.5,67,98,134/- (including Cess) along with interest and penalty. 2. The Show Cause Notice made the following allegations:- (i) The laying of railway lines/allied and incidental work done for HEL and WBPDCL are for private usage and hence not exempted under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012. (ii) Other contracts awarded by HEL were for site formation, supply of manpower etc, no exemption under Notification No. 25/2012-ST dated 20.03.2012. (iii) Value of free issue materials were not segregated year-wise hence should form part of taxable value. 3. The Notice was adjudicated by Ld. Commissioner vide impugned Order-in-Original dated 09.07.2018, wherein the Ld. Commissioner has confirmed the service tax of Rs.3,99,33,158/- along with interest and imposed equal amount of tax as penalty. The Ld. adjudicating authority dropped the remaining demand of Rs.1,68,64,976/- made in the Notice. Aggrieved against the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dropped demand of Rs.1,68,64,976/-, Rs. 1,32,99,117/- is related to addition of free issue materials in the assessable value for the purpose of demanding service tax; the ld. adjudicating authority dropped the demand by relying upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Service Tax vs Bhayana Builders Pvt. Ltd. reported in 2018 (10) GSTL 118 (SC), wherein it has been held that the value of free supply materials are not includable in the gross value for the purpose of demanding service tax. They submit that the remaining demand of Rs. 35,65,859/- has been dropped as per Circular 123/5/2010-TRU dated 24th May,2010 as the service undertaken by them would fall under Works Contact Service, being ancillary to main Work Order; accordingly, the ld. adjudicating authority has held that the assessee is eligible for 60% abatement as provided under Rule 2A(ii) of Service Tax Determination of Value Rules) 2006. 4.2. In view of the above submissions, the assessee-appellant prayed for upholding the dropping of the demand by the ld. adjudicating authority. 5. The Ld. Authorized Representative for the Revenue submits that the laying of Railway lines/all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of the Notification No. 25/2012-ST dated 20.06.2012 to new Railway lines laid for the Government is not in dispute. In the case of Mahendra Kumar Anchalia (supra), this Tribunal has held that the exemption provided under Notification No. 25/2012-ST dated 20.06.2012 is available to Railway lines laid at private companies also. 8. Thus, the issue to be decided further is whether the exemption provided under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012 is available to modification/renovation work undertaken for existing Railway lines. 8.1. The contention of the Revenue is that the modification and renovation of existing Railway lines cannot be considered as 'Original Works' and hence the services rendered are not eligible for the exemption provided under Notification No. 25/2012-ST dated 20.06.2012. 8.2. We have gone through benefit of exemption provided under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012, which provides as under: "14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) an airport, port or railways, including monorail or metro; (b) a single residential u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order pertains to four contracts, namely : - (i) 735/17/12/2011(Railway) dated 17.12.2011. (ii) 1336 dated 01.03.2013 (iii) Rites/RPO/KOL/WPDCL/STPS/Reno/P/Way/PKG/C/2014/496 dated 20.03.2015. (iv) Rites/RPO/KOL/WPDCL/KTPS/PH-IV/Truck Linking/PKG1/2014/496 dated 30.01.2015. All these four contracts are related construction of new Railway lines or renovation/modification of existing Railway Lines either for the Government or private companies. As discussed above, all these services fall within the ambit of 'Original Work" and eligible for the benefit of exemption as provided under Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012. 8.5. Thus, we hold that the demand of Service tax of Rs. 3,96,05,317/- confirmed in the impugned order relating to Works Contract Services rendered by the assessee in respect of 'Railways' to M/s. Haldia Energy Limited and M/s. WBPDCL, is not sustainable and accordingly, we set aside the same. 9. Regarding the demand of Service Tax of Rs. 3,27,841/-, confirmed in the impugned order, we observe that this demand is related to Work Order No. HEL:WO:1219 dated 16th May, 2015. The said work order is for 'Transportation and Dump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract services rendered by the assessee. In the Notice, it has been alleged that these work orders are independent and not related to the Work Orders relating to laying of Railway lines. Accordingly, the Notice alleged that the abatement @60% is not available to these work contract services. However, during the course of hearing the assessee produced evidence to the effect that all these work orders are supplementary to earlier work orders. We have perused the evidence submitted by the assessee which clearly reveals that all these work orders are supplementary to earlier work orders. Accordingly, we hold that the ld. Adjudicating authority has rightly extended 60% abatement as provided under Rule 2A(ii) of Service Tax Determination of Value Rules) 2006. Thus, we uphold the dropping of the demand by the ld. adjudicating authority on this count. 11. In view of the above discussions, we pass the following order : - (i) The demand of service tax of Rs. 3,99,33,158/- confirmed in the impugned order is set aside. (ii) Dropping of the demand of Rs.1,68,64,976/- by the ld. adjudicating authority is upheld. (iii) Accordingly, the appeal filed by the assessee is allowed and the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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