Case Law Details
Konkan Railway Corporation Ltd. Vs Commissioner of Service Tax (CESTAT Mumbai)
CESTAT Mumbai held that appellant i.e. Konkan Railway Corporation Ltd. and Indian Railways are not separate entities and hence demand of service tax is unsustainable.
Facts– It was noticed that appellant M/s. Konkan Railway Corporation Ltd. (KRCL) entered into agreement on 15.7.2002 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’
Conclusion– 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 company is also not sustainable. Held that Section 65(105)(zzzq) of Finance Act defined taxable service to mean any service provided or to be provided to any person, by any other person, in relation to support services of Business or Commerce and our finding as referred above would go to say that both the appellant and Indian Railways are not separate entities, we have no hesitation to hold that the Appellant’s case is also covered by Board’s Circular No.109/3/2009-S.T., dated 23.2.2009.
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