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TMI Blog2024 (10) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Rs. 30,37,46,966/- from M/s BSNL (BBNL) on account of providing services of laying of cable, under or alongside road, under NOFN project. However, this amount was neither shown by the appellant in their ST-3 returns nor had any service tax been paid by them on such services provided by them to M/s BSNL (BBNL). The appellant vide their letter dated 29.10.2015 had submitted that neither had they collected nor received any service tax from BSNL (BBNL) on account of providing service of laying of cable, under or alongside road, under NOFN project nor they deposited any service tax on NOFN project. Accordingly, a show cause notice dated 04.05.2016 was issued to the appellant proposing demand of service tax amounting to Rs. 3,75,43,175/- and the same was adjudicated vide Order-in-Original dated 15.03.2017 wherein the Commissioner has confirmed the demand of Service Tax amounting to Rs. 3,75,43,125/- along with interest and imposed penalty @50% amounting to Rs. 1,87,71,562/-. 3. Learned counsel for the appellant submitted that the appellant had rendered services to BBNL/BSNL towards execution of the NOFN project, which are exempt from service tax by virtue of Sl. No. 12 of Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are capital of approximately Rs. 1,50,000 Crores. He further submitted that the scope of services rendered by BSNL envisage development of telecommunication network in India, as evident from the 'aspiration' page of BSNL on its website. The Learned Counsel contended that the nature of operations performed by the company, would qualify BSNL as a governmental authority. There was no doubt that BSNL had been established by the GOI, wherein 100% shareholding also lay in the hands of GOI. BSNL is engaged in functions involving economic development, which is covered under Article 243(a)(i) of the Indian Constitution, as also in clause 3 to the Twelfth Schedule of the Indian Constitution. Hence, the first condition to Sl. No. 12 of Notification No. 25/2012-ST has been satisfied inasmuch as the services by the Appellant have been rendered to a governmental authority. Condition 2: Services are by way of installation and commissioning of original works. Learned counsel submitted that on a combined reading of Sl. No. 12 to the notification along with the definition of 'original works', it can be inferred that an activity would be exempt from service tax if it involves, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot define the term 'Construction' and accordingly, the provision has been incorrectly interpreted in the impugned order. 4. Learned Authorized Representative for the Department reiterated the findings in the impugned order and submitted that the exemption under Sl. No. 12 of Notification No. 25/2012 is available, if the specified services are provided to a Government, Local Authority or a Governmental Authority. He submitted that the Adjudicating Authority had held that the appellant provided their services of laying of cables under or alongside roads to the BSNL for a consideration, thus, such activities was for commerce and industry. Further, the impugned order has held that the BSNL is not a Government, Local Authority or a Governmental Authority, and therefore, exemption is not available. 4.1 With regard to the imposition of penalty under Section 78 of the Finance Act, 1994, Authorized Representative submitted that the Adjudication Authority was correct that the appellant had not disclosed the value of services provided to M/s. BSNL under NOFN project, in their ST-3 returns it was due to that this was discovered and otherwise would have escaped the attention of the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dam or other irrigation works; (e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or (f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;" 6.1 In the instant case, it has been submitted before us that BSNL is a 100% Government of India owned Public Sector Undertaking with an authorized share capital of approximately Rs. 1,50,000 Crores. The LD Counsel also submitted that the scope of services rendered by BSNL envisage development of telecommunication network in India, as was evident from the 'aspiration' page of BSNL website. Consequently, the Learned Counsel contended that the nature of operations performed by the company, would qualify BSNL as a governmental authority. However, one needs to carefully read the scope the exemption provided in the said notification. At the outset, it is important to consider whether the recipient of service can be called a governmental authority. From its website, we note the following:- "Bharat Sanchar Nigam Limited (BSNL) was formed by c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above, it is apparent that even though BSNL is wholly owned by the Government, but it is a State-run Telecom company, whose primary objective is to increase sales revenue with focus on subscriber retention & acquisition by way of strengthening marketing, quality of service and customer delivery. Consequently, any activity undertaken for BSNL would also be for the same purpose, viz., expanding its subscriber base and increase revenues. Therefore, it cannot be said that the NOFN project (now known as Bharat Net project) aimed at bringing broadband connectivity to the Gram Panchayats was only towards planning for economic and social development. Such network was laid in recognition of the fact that expansion was important to increase their subscriber base, thus providing an opportunity to increase their revenues. Hence, the activity undertaken by the appellant is for use for commerce. 6.3 The term 'Commerce' as understood by layman refers to the activity of buying and selling goods and services, between businesses or individuals, and can occur domestically or internationally. Commerce is a key component of the economy, encompassing various activities such as trade, logistics, adve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. The relevant paras of some of the notable judgments in this regard are reproduced hereinafter: (i) Commissioner of Customs (Import), Mumbai vs. Dilip Kumar & Company - 2018 (361) ELT 577 (S.C.) "41. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. ............................................................................................... 52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave [1978 (2) E.L.T. (J 350) (SC) = 1969 (2) S.C.R. 253) that such a Notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on fabrics were produced on power-looms owned by the co-operative society and there is nothing in the notifications to suggest that the cotton fabrics should be produced by the co-operative society "for itself" and not for a third party before it was entitled to claim exemption from excise duty. It was contended on behalf of the respondent that the object of granting exemption was to encourage the formation of co-operative societies which not only produced cotton fabrics but which also consisted of members, not only owning but having actually operated not more than four power-looms during the three years immediately preceding their having joined the society. The policy was that instead of each such member operating his looms on his own, he should combine with others by forming a society which, through the co-operative effort should produce cloth. The intention was that the goods produced for which exemption could be claimed must be goods produced on its own behalf by the society. We are unable to accept the contention put forward on behalf of the respondents as correct. On a true construction of the language of the notifications dated July 31, 1959 and April 30, 1960 it is clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the appellant is covered by the language of the two notifications dated July 31, 1959 and April 30, 1960 and appellant is entitled to exemption from excise duty for the cotton fabrics produced for the period between October 1, 1959 to April 30, 1960 and from May 1, 1960 to January 3, 1961. It follows therefore that the appellant is entitled to the grant of a writ in the nature of certiorari to quash the order of the Assistant Collector of Central Excise of Baroda dated November 26, 1962 and the appellate order of the Collector of Central Excise dated November 12, 1963." In view of the above discussions, we hold that the appellant is not entitled to the benefit of the Notification no. 25/2012-ST dated 20.06.2012. We find no infirmity in the impugned order. 7. However, we note that the appellant has submitted that the benefit of cum-duty should be extended to them. It is seen from the show cause notice that the appellant had vide their letter dated 29.10.2015 submitted that neither had they collected/received the service tax from M/s BSNL(BBNL) on account of providing the service of laying cable, under or along side the road under NOFN project or did they deposit any service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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