9911796707
TMI Blog2023 (9) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant No.(2) is also a partnership firm and engaged in the activity of "Works Contract Service" for railways. 2.2 A show-cause notice was issued to the appellant to demand service tax from the Appellant No.(1) for the period 2014-15, 2015-16, 2016-17 whereas from the Appellant No.(2) for the period 2013-14 to 2014-2015 alleging the appellant were engaged in the activity of maintenance and repair services, manpower supply services, road transportation services and also the Appellant No.1 for demand of service tax on the Director's services. 2.3 The matter was adjudicated. The demand of service tax was confirmed. 2.4 Aggrieved from the said order, the appellants are before us. 3. The ld.Counsel for the appellants submits that the appellants were engaged in the activity of construction and maintenance of railways. Therefore, for the said activity, the appellants are not liable to pay service tax in terms of Notification No.25/2012-ST dated 20.06.2012. He also relies on the decision of this Tribunal in the case of Hari Construction & Associates Private Limited Vs. Commissioner of CGST & Excise, Patna II vide Final Order No.76168/2023 dated 13.07.2023, wherein, this Tribunal has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner in which it is to be read, the adjudication order has referred to decision in re Afcons Infrastructure Ltd but to the exclusion of everything therein other than submissions made on behalf of Revenue and his opinion therefrom that '52. Having arrived at the above conclusion, I turn my attention to the prime contention of the Noticee that the impugned SCN has resorted to a narrow understanding of expression 'railways' in the absence of a permissible referral under the Finance Act/Mega exemption notification. From my reading of the records of the case and the available material, I find that the Noticee is way off the mark in understanding the logic and the emphasis of the SCN which in my view is well founded and amply supported by the statute, be it the Finance Act or the Railways Act. For this reason, an examination of the judicial pronouncements quoted by the Noticee in their defence does not seem warranted.' speaks for itself. This transgression on the part of the adjudicating authority is not acceptable. We do not wish to dilate further on this. 8. Entitlement of every sort of railways to the exemption provided, either by exclusion from the definition of 'taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian Context is popularly known as "Indian Railways" and is more appropriately understood as Railways operated under the Indian Railways Act especially for the purpose of 8 ST/86191/2021 any special dispensations such as tax exemptions.' 6. We find no authority for these sweeping statements on the intent of Finance Act, 1994, the scope of the taxable service under which the levy has been confirmed or the status of railway operations in the country. In the context of the claim of the appellants, limited to the exclusion from the taxability otherwise attached to 'commercial or industrial construction service', we are not required to define the scope of the taxable service; the test of commercial imperative of the impugned activity is not in dispute. All that we are required to ascertain is the conformity of the operation of the recipients of the service to the excluded aspect of the taxable service. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d jurisdictional monopoly. The 'taxable service' in Finance Act, 1994 excluding 'railways' from the ambit of the service did not place any restriction on benefit going to private railways. The statute, 10 ST/86191/2021 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." The said order has been affirmed by the Hon'ble Apex Court in Civil Appeal Diary No.22280/2023 dated 04.07.2023. 9. We, therefore, hold that the issue is no more res-integra and 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. 10. In view of this, we do not find any merit in the impugned order and the same is set aside." 6. In view of the above, we hold that for the activity of construction of railways and maintenance thereof, no service tax is payable by the Appellant No.(1) & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted tax under Section 192 of the Income-tax Act which is the applicable provisions for TDS on payments to employees. This factual and legal position also fortifies the submission made by the appellant that the whole-time directors who are entitled to variable pay in the form of commission are 'employees' and payments actually made to them are in the nature of salaries. This factual position cannot be faulted in absence of any evidence to the contrary. The submission of Ld. DR as well as the finding made by the Commissioner in the impugned order that since the whole-time directors are compensated by way of variable pay and hence not employees, does not have any legal basis and is completely misplaced, and the same cannot be sustained. The decision of the Tribunal in Rent Works India (supra) has clearly set the legal position that when the Income Tax Department considers payment in the nomenclature 'consultancy fee' as salaries, on which TDS is also made, the said payments cannot be said towards rendition of taxable service for levy of service tax. The decision in case of PCM Cement Concrete Pvt. Ltd. (supra) has set the legal proposition that consideration paid to whole-time direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
