Mahendra Kumar Anchalia Vs Commissioner of CGST & CX (CESTAT Kolkata)
CESTAT Kolkata held that works contract service including sub-contracts related to Railway is exempted from service tax vide notification no. 25/2012-ST dated 20th June 2012.
Facts- The Appellant are engaged in providing Works Contract Services by way of construction of Railway infrastructure such as the Erection and Commissioning of Signaling and Telecommunication system of the Railway. They also provided the above Works Contract Service on a sub-contracting basis and undertake Maintenance or Repair Service in respect of the above services. Further, they received certain services where liability for payment of service tax has arisen on reverse charge basis.
On the basis of that investigation, a Show Cause Notice was issued to the Appellant demanding service tax of Rs.4,91,53,613/-including Cess. The Notice also demanded interest and penalties u/s. 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.
Conclusion- Held 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 all Railways whether it is run by Government or the tracks are laid at private Firms. The exemption notification has a wider impact and it is sufficient to cover any infrastructure as Railway. As there is no mention of the fact that the structure has to be used for public carriage, we hold that the exemption is available to all Railway infrastructure.
Held 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.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The Appellant, M/s MRT Signals Ltd. are engaged in providing Works Contract Service by way of construction of Railway infrastructure such as Erection and Commissioning of Signaling and Telecommunication system of Railway. They also provided the above Works Contract Service on sub-contracting basis and undertake Maintenance or Repair Service in respect of the above services. Further, they received certain services where liability for payment of service tax has arisen on reverse charge basis.
2. Acting on the intelligence 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:
