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2023 (9) TMI 811 - AT - Service TaxExemption from Service Tax - services of construction and maintenance of railways - applicability of N/N. 25/2012-ST dated 20.06.2012 - Manpower service - transportation services - Director s services - levy of penalty - HELD THAT - The said activity is exempted from payment of service tax in terms of Notification No.25/2012-ST dated 20.06.2012 and the same has been held exempted by this Tribunal in the case of M/S HARI CONSTRUCTION ASSOCIATES PRIVATE LIMITED VERSUS COMMISSIONER OF CGST EXCISE PATNA II 2023 (9) TMI 454 - CESTAT KOLKATA wherein this Tribunal has held the appellant is entitled for benefit of Notification No.17/2005-ST dated 07.06.2005 prior to 01.07.2012 and under Notification No.25/2012-ST dated 20.06.2012 for the period post 01.07.2012 - Thus the activity of construction of railways and maintenance thereof no service tax is payable by the Appellant No.(1) (2). Therefore the demand of service tax on that account is set aside. Manpower service - HELD THAT - It has been admitted by the appellant that in reply to the show-cause notice they paid the service tax thereon. Therefore the same is not contested. Transportation services - HELD THAT - The appellant is not contesting the same. Director s services - HELD THAT - The said demand is not sustainable in the light of the decision of this Tribunal in the case of M/S. MAITHAN ALLOYS LTD. VERSUS CCE ST BOLPUR 2019 (4) TMI 1595 - CESTAT KOLKATA wherein it has been held Demand of service tax on remuneration paid to whole time directors cannot be sustained - the demand of service tax on account of construction of railways and maintenance thereof and the Director s service is not sustainable against the Appellant. Penalty - HELD THAT - No penalty is imposable on all the appellants. Appeal disposed off.
Issues Involved:
1. Demand of service tax on construction and maintenance of railways. 2. Demand of service tax on manpower services. 3. Demand of service tax on transportation services. 4. Demand of service tax on Director's services. 5. Imposition of penalties. Summary: Issue 1: Demand of service tax on construction and maintenance of railways The appellants challenged the demand of service tax for construction and maintenance of railways, claiming exemption under Notification No.25/2012-ST dated 20.06.2012. The Tribunal referred to its previous decision in Hari Construction & Associates Private Limited Vs. Commissioner of CGST & Excise, Patna II, which held that services related to construction and maintenance of railways are exempt from service tax. The Tribunal reiterated that "no service tax is payable by the Appellant No.(1) & (2)" for these activities, setting aside the demand. Issue 2: Demand of service tax on manpower services The appellant admitted and paid the service tax on manpower services amounting to Rs.27,91,113/ in their reply to the show-cause notice and did not contest this demand before the Tribunal. Issue 3: Demand of service tax on transportation services The appellant did not contest the demand of service tax on transportation services. Issue 4: Demand of service tax on Director's services The Tribunal held that the demand of service tax on Director's services is not sustainable, referencing its decision in Maithan Ispat Limited Vs. Commissioner of Central Excise & Service Tax, Bolpur. It was established that whole-time directors are considered employees under the Companies Act, 2013, and remuneration paid to them is in the nature of salaries, not subject to service tax. Issue 5: Imposition of penalties Given the findings on the demand of service tax, the Tribunal concluded that no penalty is imposable on the appellants. Conclusion: The Tribunal set aside the demand of service tax on construction and maintenance of railways and Director's services, while upholding the uncontested demands on manpower and transportation services. Consequently, no penalties were imposed, and the appeals were disposed of accordingly.
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