The Central Excise Service Tax Appellate Tribunal (CESTAT) has quashed service tax for construction of railway siding track works and also penalty imposed is also waived.
The grievance of M/s NMC Industries (P) Ltd against which has confirmed recovery of service tax amounting to Rs 53,67,337/- under section 73 of Finance Act, 1994, along with interest thereon under section 75 of Finance Act, 1994, besides imposing a penalty of a like amount under section 78 of Finance Act, 1994, is the non-consideration of their claim of exclusion from taxability as the provider of ‘works contract service’ and ‘commercial and industrial construction service’ for the period from 2009-10 to 2012-13.
It is common ground that the demand pertains to five projects undertaken by the appellant which, admittedly, related to the enabling of locomotives to travel over specified stretches. Of these projects, it has been held in the impugned order that, while the construction of a railway siding track works at Dronagiri for M/s Hind Terminals Pvt Ltd in 2009-10 was chargeable to tax under section 65 (105) (zzzza) of Finance Act, 1994.
As the provider of ‘works contract service’, the projects contracted with M/s ACC Ltd, M/s Utkal Alumina International Ltd, M/s Utility Energytech & Engineers Pvt Ltd and M/s Bulk Cement Corporation (India) Ltd were liable to tax under section 65(105)(zzq) of Finance Act, 1994, as the provider of ‘commercial and industrial construction service’, for the entire period of the dispute.
The manner in which the show cause notice, and the impugned order, appears to have segregated the two activities is, to our mind, questionable in the light of the findings therein and settled judicial precedent. The first of the impugned projects was noticed as having discharged liability of Value Added Tax, levied by the state government concerned, and, by reference to one of the legs for identification of ‘works contract’ in Explanation appended to section 65(105)(zzzza) of Finance Act, 1994, arrived at the conclusion that this service had been rendered.
For the other projects, it would appear that the reference to ‘service tax’ in the respective contracts led to the conclusion of taxability under the alternative entry on the presumption of non-taxability under Value Added Tax.
Contesting the dichotomous application of taxing entry for that which are similar projects, Learned Counsel for appellant placed reliance on the decision of the Tribunal in Siemens Ltd v. Commissioner of Service Tax.
Learned Authorised Representative submitted that, if the applicability of this decision is affirmed, the adjudicating authority should be afforded an opportunity to examine the contracts once again in a fresh proceeding.
The coram comprising of Judicial Member, Suvendu Kumar Pati, and Technical Member, C J Mathew delivered order based on an appeal filed by NMC Industries Pvt Ltd.
The Tribunal observed that the ‘constructions’ excluded from taxability under both the entries in section 65(105) of the Finance Act, 1994 are, plainly, unqualified. The legislative intent and cannot be circumscribed by encroachment, or restrictive interpretation ventured upon by tax authority.
In the Light of judgment of the Supreme Court in Commissioner of Sales Tax, Uttar Pradesh v. Modi Sugar Mills Ltd appeal was allowed.
While allowing the appeal tribunal further said that interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the birds of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot import provision in the statute so as to supply any assumed deficiency.’
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