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2023 (2) TMI 1175 - AT - Service TaxDemand of service tax on advances received - contract for ‘construction and commissioning of railway sliding and signaling telecommunication systems including associated electrical and mechanical instruments’ for facilitating handling of coal at the Kudgi and Gadarwara super thermal power projects - benefit of N/N. 25/2012-ST dated 28th June 2012 - HELD THAT:- Entitlement of every sort of railways to the exemption provided, either by exclusion from the definition of ‘taxable service’ in the ‘pre-negative list’ regime or by specific exemption in the ‘negative list’ regime has been dealt with in several decisions of the Tribunal. While addressing the issue of ‘commercial consideration’ being the bench mark for determining eligibility for exclusion/exemption, the Tribunal, in HINDUSTAN CONSTRUCTION COMPANY LTD VERSUS COMMISSIONER OF SERVICE TAX MUMBAI – VII [2020 (10) TMI 380 - CESTAT MUMBAI] held that Under the Railways Act, 1989, the monopoly of establishing the rail networks vests with the ‘Indian Railways’ and any other operator functions within a policy pertaining to outsourcing of such activities save where the law, for particular objectives, makes an exception. One such is the metro operations for which specific enactments enable other operators without derogating from the status of being ‘railway’ and, more often than not, by enterprises that are jointly owned by the Central and State Governments. Even where the ownership does not vest in the government, the operation of such railways is under special enactment which are not excluded from the sphere of the expression ‘railways’. It is, thus, clear that the proposition of strict construction of intent of exemption notification must also go hand in hand with strict construction of every word/phrase therein. The exemption from tax is available to ‘railways’, excluding mono rail or metro, by notification no. 25/2012-ST dated 20th June 2012 after 1st July 2012 and, as conceded by the adjudicating authority, there being no definition of ‘railway’, either therein or in Finance Act, 1994, the distinction between railway for private purpose and railway for public service cannot be artificially contrived to suit tax administration; neither can the definition in another statute be drawn upon for the purported purpose of illumination. The Railways Act, 1989 was enacted to authorize Government of India to operate the railway network of the country; it also affords a framework for administration of the railway services and jurisdictional monopoly - The statute, too, did not consider it necessary to fall back on the definition of ‘railways’ in another statute for determination of taxability and it is not open to the adjudicating authority to arrogate that privilege in an executive capacity. The intent of exclusion prior to 1st July 2012, and exemption for the period, thereafter, is abundantly clear. Following the decisions of the Tribunal that have consistently interpreted the legislative intent of the exemption, the impugned order is set aside - appeal allowed.
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