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2020 (10) TMI 380 - AT - Service TaxWorks contract service - scope of the term Railways - stand of the tax authorities that the admitted exception of ‘railways’ was restricted to activities engaged in connection with railway undertakings of the Government is, according to him, erroneous - N/N. 9/2016-ST dated 1st March 2016 - HELD THAT:- The decision of the Hon’ble Supreme Court in Commissioner of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] was not available to the adjudicating authority and the finding therein that all the component activities of ‘works contract service’, to the extent taxable under separate entries prior to the new taxable service, were intended to cover service simpliciter. Consequently, the claim of the appellant to be provider of ‘works contract service’ cannot but be accepted. The exclusion, whether under the separate entry or within the umbrella of the new taxable service, of ‘railways’ continued unabated. It would appear that the adjudicating authority was particularly impressed by the activity brought within the tax net to be ascertained on the basis of commerciality to bring it in conformity with the description of the taxable activity. Hence, according to him, the operation of the two recipients of service, being evidently commercial, did not merit the exclusion contained therein - adjudicating authority is far from correct in assuming that the dutiability devolving, under Customs Act, 1962 and Central Excise Act, 1944, on governmental transactions by specific inclusion in the statutes is, similarly, present in Finance Act, 1994. Nor does the reason ascribed by him as the prompting for such inclusion in the commodity tax statutes find resonance in any decision, circular or elucidation. Furthermore, to the extent of our understanding, the operations, or its popular designation as ‘Indian Railways’, of government-run Railways is not stripped of its commercial mantle. A stray reference to the statute governing railway operations does not establish the postulate of such definition to be applicable in every special dispensation. In the absence of any qualification for the ‘railway’ incorporated in the exclusion component of the taxable service, any railway, irrespective of ownership, is covered. Within the scheme of ‘negative list’, there is a specific exemption for metro or monorail within the broader exclusion available to Railways. The exclusion of ‘metro’ or ‘monorail’ has occurred only after the period of dispute and therefore does not concern us. The exemption afforded by notification no. 25/2012-ST dated 20th June 2012 extends to all activities that have been filtered through the statutory hierarchy referred to supra to remain taxable but for exercise of powers under section 93 of Finance Act, 1994. Therein, the specific escapement afforded for services rendered in connection with construction of railways is. by inclusion, extended to construction of monorail and metro - there are no incongruity here. 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’. Appeal allowed - decided in favor of appellant.
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