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TMI Blog2024 (10) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... strengthening marketing, quality of service and customer delivery. Consequently, any activity undertaken for BSNL would also be for the same purpose, viz., expanding its subscriber base and increase revenues. Therefore, it cannot be said that the NOFN project (now known as Bharat Net project) aimed at bringing broadband connectivity to the Gram Panchayats was only towards planning for economic and social development. Such network was laid in recognition of the fact that expansion was important to increase their subscriber base, thus providing an opportunity to increase their revenues. Hence, the activity undertaken by the appellant is for use for commerce. The term Commerce as understood by layman refers to the activity of buying and selling goods and services, between businesses or individuals, and can occur domestically or internationally. Commerce is a key component of the economy, encompassing various activities such as trade, logistics, advertising, customer interactions, also includes different channels like traditional retail, online transactions (e-commerce), and wholesale trade etc. As in Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers [ 2019 (11) TMI 182 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise V. Maruti Udyog Ltd. [ 2002 (2) TMI 101 - SUPREME COURT ] wherein the Court granted the cum-duty benefits to the assessee. The Hon ble Court noted that the service tax is on the value of taxable services rendered and therefore service tax has to be collected on that value only and the value of taxable services cannot be said to include the tax also. The Court went on to note that the Finance Act, 2006 inserted clause 2 to Sec. 67 with effect from 18.04.2006 provides that where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged. We find it appropriate to remand the matter to the original authority for recalculation of the demand extending the benefit of cum-tax on the gross amount charged by the appellant. Accordingly, the penalty under section 78 would be appropriately recalculated, based on the demand. - MS. BINU TAMTA, MEMBER (JUDICIAL) AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri B. L. Narsimahan and Ms. Shagun Arora, Advocates for the Appellant Shri Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business or profession; . The definition of Governmental authority is given below: (s) governmental authority means an authority or a board or any other body, (i) set up by an Act of Parliament or a State Legislature, or (ii) (ii) established by Government, (ii) with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution (y) original works has the meaning assigned to it in Rule 2A of the Service Tax (Determination of Value) Rules, 2006; 3.1 The Ld. Counsel contended that the eligibility of exemption under Sl. No. 12 to Notification No. 25/2012-ST requires the collective fulfilment of the following conditions: The services must involve construction, erection, commissioning. installation, completion, fitting out, repair, maintenance, renovation or alteration of. i. A civil structure; or ii. Any other original works 3.2 The Ld Counsel for the appellant submitted that the activity undertaken by the Appellant satisfies all three conditions. He submitted the following: Condition 1: Services by the Appellant are rendered to a governmental authority. Learned Counsel submitted that in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying out of the original work. As per Sl. No. 12 to Notification No. 25/2012-ST, the exemption in respect of, inter alia, installation of original work would be available only if such original work is not intended for commerce industry or any business or profession. It is further submitted that the NOFN project (now, BharatNet project) is aimed bringing broadband connectivity to the Gram Panchayats. This is clear from the MOU between the Department of Telecommunications, GOI and BBNL for the year 2015-16. Hence, there is no commercial or business relation involved in the NOFN project, and consequently, the original work executed by the Appellant is also not meant for commerce, industry business or profession. 3.1 Learned counsel further contended that the demand proposed in the show cause notice and confirmed in the impugned order are based on an incorrect understanding of facts and legal provisions. In this regard, the appellant s assertion is that BSNL qualifies as a Government Authority which has been defined in Notification No. 25/2012-ST. Hence, reference to the meaning of Government under the General Clauses Act is unwarranted. In light of the above submission, it is prayed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the exemption under Notification 25/2012-ST dated 20.06.2012. The relevant clauses of the notification are reproduced for ease of reference hereinafter: Government of India Ministry of Finance (Department of Revenue) New Delhi, the 20th June, 2012 G.S.R. 467(E). - In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) and in supersession of notification number 12/2012- Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 210 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely:- 1. Services provided to the United Nations or a specified international organization; .. 12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid-up capital of Rs. 38,886.44 Crores comprising of Rs. 31,386.44 Crores of Equity and Rs. 7,500 Crores of Preference shares capital. Its total income during FY 2022-23 is Rs.20,699 Crores (audited). However, the share capital of BSNL will be increased from Rs. 1,50,000 to Rs. 2,10,000 Cr, as a result of approved capital infusion on account of spectrum charges. . BSNL is a technology-oriented integrated telecom service providing company which provides complete bouquet of telecom services viz: Wire line Services GSM Mobile Services including 2G, 3G, 4G Value-added Services (VAS) Internet and Broadband services including Fiber to the Home (FTTH) Wi-Fi services Data Center services Enterprise Data services such as Leased circuits, MPLS VPN etc National Long-Distance services International Long-Distance Services Objectives Increase sales revenue with focus on subscriber retention acquisition by way of strengthening marketing, quality of service and customer delivery. Accelerate the pace of expansion of mobile data services with up-gradation of technology. Leverage data services to increase BSNL s customer s base revenues by providing higher bandwidths capabilities for wire line and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ordinary meaning of the expression commercial purpose , denotes pertaining to commerce . The Hon ble Court relied on Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, [(2020) 2 SCC 265] wherein it was held that a straight-jacket formula cannot be adopted in every case and the broad principles which can be curled out for determining whether an activity or transaction is for a commercial purpose would depend on facts and circumstances of each case. In the instant case, it stands established that the appellant undertook the activity of laying cables for M/s BSNL, which was for the purpose of providing broadband connectivity was for connecting the areas of India for the purpose of increasing their business, sales revenue which would clearly fall within the ambit of commerce. 6.4 We now consider the wordings of the said Notification. We note the Notification exempts a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession . The term used in the said notification is that other than commerce, industry or any other business or profession , which is required to be interpreted strictly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption. In Novopan Indian Ltd. (supra), this Court held that a person, invoking an exception or exemption provisions, to relieve him of tax liability must establish clearly that he is covered by the said provisions and, in case of doubt or ambiguity, the benefit of it must go to the State. A Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave - (1996) 2 SCR 253, held that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption. (iii) Novopan India Limited vs. Collector of Central Excise Customs, 1978 (2) ELT J 350 18 . We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals - and in Union of India v. Wood Pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well founded and must be accepted as correct. The notification dated July 31, 1959 grants exemption to cotton fabrics produced by any co-operative society formed of owners of cotton power-looms which is registered or which may be registered on or before March 31, 1961 subject to four conditions set out in the notification. In the next notification dated April 30, 1960 exemption was granted to cotton fabrics produced on power-looms owned by any co-operative society or owned or allotted to the members of the society, which is registered or which may be registered on or before March 31, 1961 subject to the conditions specified in the notification. It was contended on behalf of the appellant that under the contract between the appellant and the Society there was no relationship of master and servant but the appellant supplied raw material and the contractor i.e., the Society produced the goods. But even on the assumption that the appellant had manufactured the goods by employing hired labour and was therefore a manufacturer, still the appellant was entitled to exemption from excise duty since the case fell within the language of the two notifications dated July 31, 1959 and April 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islature probably would have meant although there has been an omission to enact it. In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication. It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus. As appears in the judgment of the Privy Council in Crawford v. Spooner, (1846) 6 Moo PC 1(9): ......... we cannot aid the legislature s defective phrasing of the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there. Learned Counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power-looms by constituting themselves into co-operative societies. But the operation of the notification has to be judged not by the object which the rule-making authority had in mind but by the words which it has employed to effectuate the legislative intent. Applying this principle we are of opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 3 (SC)] wherein the Court granted the cum-duty benefits to the assessee. The Hon ble Court noted that the service tax is on the value of taxable services rendered and therefore service tax has to be collected on that value only and the value of taxable services cannot be said to include the tax also. The Court went on to note that the Finance Act, 2006 inserted clause 2 to Sec. 67 with effect from 18.04.2006 provides that where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged. 8. In view of the settled position of law, we find it appropriate to remand the matter to the original authority for recalculation of the demand extending the benefit of cum-tax on the gross amount charged by the appellant. Accordingly, the penalty under section 78 would be appropriately recalculated, based on the demand. 9. Consequently, we uphold the impugned order to the extent indicated above, and the appeal is allowed to the extent indicated above. (Order pronounced in the open Court on 17.10.2024 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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