Custom, Excise & Service Tax Tribunal
Kailash Electricals vs Cgst & Ce Kanpur on 4 April, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70381 of 2022
(Arising out of Order-in-Original No.KNP-EXCUS-000-COM-010-19-20 dated
28/02/2020 passed by Commissioner of Central Excise & Service Tax,
Kanpur)
M/s Kailash Electricals, .....Appellant
(117/N/52 Bishambar Dham, Kakadeo, Kanpur)
VERSUS
Commissioner of Central Excise &
Service Tax, Kanpur ....Respondent
(117/7, Sarvodaya Nagar, Kanpur-208005)
WITH
Service Tax Appeal No.70373 of 2020
(Arising out of Order-in-Original No.KNP-EXCUS-000-COM-010-19-20 dated
28/02/2020 passed by Commissioner of Central Excise & Service Tax,
Kanpur)
Commissioner of Central Excise &
Service Tax, Kanpur .....Appellant
(117/7, Sarvodaya Nagar, Kanpur-208005)
VERSUS
M/s Kailash Electricals, ....Respondent
(117/N/52 Bishambar Dham, Kakadeo, Kanpur)
APPEARANCE:
Shri Dharmendra Srivastava, Chartered Accountant for the Appellant-
assessee
Shri A.K. Choudhary, Authorised Representative for the Respondent-
Revenue
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NOs.70165-70166/2025
DATE OF HEARING : 17 December, 2024
DATE OF PRONOUNCEMENT : 04 April, 2025
Service Tax Appeal Nos.70381 of 2022 &
2 70373 of 2020
SANJIV SRIVASTAVA:
These two appeals, one by the assessee (appellant) and
other by revenue, are directed against Order-in-Original No.KNP-
EXCUS-000-COM-010-19-20 dated 28/02/2020 passed by
Commissioner of Central Excise & Service Tax, Kanpur. By the
impugned order following has been held:-
ORDER
i) (i) I drop the demand of Rs. 1,95,89,722/- for the work executed by the party for railways in view of the discussions made above.
ii) I confirm the amount of Rs.83,76,735/- charged by the party should be treated as taxable value under the category of "Management, Maintenance or Repair Service upto 30.06.2012 and under "Other than negative list" Service w.e.f. 01.07.2012, and I confirm the demand of Service Tax amounting to Rs. 10,35,364/- (Rupees Ten Lakhs Thirty Five Thousand Three Hundred and Sixty Four only) (including Ed Cess Secondary & Higher Education Cess] and order for its recovery from the party under proviso to Section 73(1) of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017.
iii) I also order for recovery of Interest under Section 75 of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017, at appropriate rates from the due date till the date of actual deposit of the confirmed amount of Service Tax as in (1) and (ii) above
iv) In terms of Section 76 of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017, I impose a penalty of Rs. 100/- (Rupees One Hundred only) for every day during which failure towards payment of service tax for the period 2012-13 continues or at the rate of one percent of such tax, per month, whichever is higher, starting with the 1 day after the due date till the date of actual payment of outstanding amount of Service Tax Appeal Nos.70381 of 2022 & 3 70373 of 2020 Service Tax subject to an amount not exceeding 50% of the Service Tax payable by them.
v) I also impose a penalty of Rs 10,000/- under Section 77(2) of the Finance Act. 1994, read with Section 174 of the CGST Act, 2017, upon the party for the contraventions detailed hereinabove
vi) I also impose a late fee of Rs 20,000/- under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994, read with Section 174 of the CGST Act, 2017, upon the party for the contraventions detailed hereinabove"
2.1 Appellant-assessee is engaged in the work of designing, supply, erection, commissioning and installation of electrical equipments and devices including wiring and fitting thereof. They are also engaged in Construction work, repair and maintenance of electrical equipments under annual maintenance contracts and Supply of tangible goods Service. They are registered under the category of "Works Contract Services and Management, Maintenance or Repair Services.
2.2 On the basis of intelligence that the assessee was not discharging service tax on the services provided, the premises of the appellant-assessee was visited by the officers on 19.08.2009. At the time of visit Shri Devendra Kumar, Proprietor of the assessee was present on the spot and on demand, he produced the records relating to his business activity i.e. balance sheets for the years 2004-05, 2005-06, 2006-07 & 2007-08 alongwith a chart showing payment received by them under said contract receipt for the Financial Year 2009-10. Statement of Shri Devendra Kumar, Proprietor was recorded wherein he stated that-
They are engaged in executing work relating to supply, erection, design, installation and commissioning of electrical work for Railway and I.I.T., Kanpur. On some occasion they have also executed electrical work for CPWD.
Service Tax Appeal Nos.70381 of 2022 &
4 70373 of 2020 His work comprises of wiring, fitting, fitting off Panel, Cable, erection of transformers etc. He was also taking annual maintenance contract of Electrical equipment for IIT, Kanpur. For getting work order, they get the approval from various departments under Letter of Acceptances along with the site where work had to be executed and accordingly, electrical are completed.
All the payments were received in cheques after the execution/completion of work. Bills were not raised by them rather theses were being made by the service recipient themselves and they put their signature in token or agreement.
They have not paid any service tax on their work as in his opinion the service tax in not applicable for the work of railways and institutes as the same are not commercial concerns.
2.3 After scrutiny and investigation, revenue was of the view that appellant-assessee has not paid service tax as detailed in table bellow:-
Amount in Rs Sl. No. SCN dated Period Service tax Not paid
1. 23.04.2010 01.10.2004 to 31.03.2009 2,10,89,543
2. 23.04.2010 01.04.2009 to 31.03.2010 4,61,581 Total 2,15,51,124 Subsequent show cause notices dated 22.10.2010, 17.10.2011 & 21.08.2012 were issued to the assessee were identical to that of show cause notice dated 23.04.2010. 2.4 For the period 2012-13 it was observed that the appellant had short paid service tax as detailed below:
Total Amount Received Service Tax (inclusive of Cess) Rate (%) Short Paid (Rs) Contract receipts from Railways 15,84,92,897 12.36 1,95,89,722 Contract receipts from IIT Kanpur 1,56,06,568 12.36 10,35,364 Service Tax Appeal Nos.70381 of 2022 & 5 70373 of 2020 2.5 A show cause notice dated 20.05.2014 were issued to the appellant, asking them to show cause as to why-
(i) the amount of Rs. 15,84,92,897/- charged by them should not be treated as taxable value under the category of "Erection, Commissioning or Installation service upto 30.06.2012 and under "Other than negative list Service w.e.f. 01.07.2012 as discussed here-in-above and accordingly Service Tax (including Education Cess and Higher Education Cess) amounting to Rs. 1,95,89,722/- should not be demanded and recovered from them under proviso to Section 73(1) of the Finance Act, 1994 (as amended from time to time) for the reasons detailed here-in-above,
(ii) the amount of Rs. 83,76,735/- charged by them should not be treated as taxable value under the category of "Management. Maintenance or Repair Service upto 30.06.2012 and under "Other than negative list Service w.e.f. 01.07.2012 as discussed hereinabove and accordingly Service Tax (including Education Cess and Higher Education Cess) amounting to Rs. 10,35,364/ should not be demanded and recovered from them under proviso to Section 73(1) of the Finance Act, 1994 (as amended from time to time) for the reasons detailed here-in-above.
(iii) Interest should not be demanded & recovered from them on the amounts demanded above under the provisions of Section 75 of chapter V of the Finance Act, 1994.
(iv) Penalty should not be imposed upon them under Section 76 of the Finance Act, 1994, for the failure to make the payment of Service Tax in prescribed time limit
(v) Penalty should not be imposed upon them under Section 77(1)(a) of the Finance Act, 1994 for failure to take registration under the category of "Erection, Commissioning or Installation" and "Management, Maintenance or Repair services.
Service Tax Appeal Nos.70381 of 2022 & 6 70373 of 2020
(vi) Late Fees as prescribed under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994 for delay in filing the ST-3 return for the period April 12 to June 12 should not be paid, whenever said ST-3 return is filed.
(vii) Penalty should not be imposed upon them under Section 77(2) of the Finance Act. 1994 for the failure to self- assess the correct taxable value for discharging the Service Tax
(viii) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 for suppressing the value of taxable services provided by them before the department and contravening the provisions of the Finance Act, 1994, with intent to evade payment of Service Tax." Show cause notice dated 21.08.2012 was also issued on the same lines demanding service tax to the tune of Rs.60,22,651/-. 2.5 All the show cause notices have been adjudicated as per the Order-in-Original dated 25.02.2015 by holding as follows:-
"ORDER By holding that Mis Kailash Electricals were providing taxable services of Erection, Commissioning or Installation services' and 'Management, Maintenance or Repair Services during the subject period of the show cause notice -
(i) confirm that the amount of Rs. 15,84,92,897/- charged by the party should be treated as taxable value under the category of "Erection, Commissioning or Installation service upto 30.06.2012 and under "Other than negative list Service w.ef 01.07.2012, and I confirm the demand of Service Tax amounting to Rs. 1.95.89,722/- (Rupees One Crore Ninety Five Lakh Eighty Nine Thousand Seven Hundred and Twenty Two only) (including Ed. Cess+ Secondary & Higher Education Cess] and order for its recovery from the party under proviso to Section 73(1) of the Finance Act, 1994 (as amended from time to time).
Service Tax Appeal Nos.70381 of 2022 & 7 70373 of 2020
(ii) I confirm that the amount of Rs.83,76,735/- charged by the party should be treated as taxable value under the category of "Management. Maintenance or Repair Service upto 30.05.2012 and under "Other than negative list Service w.e.f. 01.07.2012, and I confirm the demand of Service Tax amounting to Rs. 10,35,364/- (Rupees Ten Lakhs Thirty Five Thousand Three Hundred and Sixty Four only) (including Ed. Cess Secondary & Higher Education Cess) and order for its recovery from the party under proviso to Section 73(1) of the Finance Act. 1994 (as amended from time to time)
(iii) also order for recovery of intarest under Section 75 of the Finance Act, 1994, at appropriate rates from the Jue date till the date of actual deposit of the confirmed amount of Service Tax as in (1) and (li) above.
(iv) In terms of Section 76 of the Finance Act, 1994, I impose a penalty of Rs. 100/-(Rupees One Hundred only) for every day during which failure towards payment of service tax for the period 2012-13 continues or at the rate of one percent of such tax, per month, whichever is higher, starting with the 1 day after the due date till the date of actual payment of outstanding amount of Service Tax subject to an amount not exceeding 50% of the Service Tax payable by them
(v) In terms of Section 77(1)(a) of the Finance Act, 1994, I impose a penalty of Rs. 10,000/- (Rupees Ten Thousands only) upon the party for the contraventions detailed hereinabove.
(vi) I also impose a penalty of Rs. 10,000/- (Ten Thousand only) under Section 77(2) of the Finance Act, 1994, upon the party for the contraventions detailed hereinabove.
(vii) I also impose a late fee of Rs. 20,000/- (Twenty Thousand only) under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994, upon the party for the contraventions detailed hereinabove."
Service Tax Appeal Nos.70381 of 2022 & 8 70373 of 2020 2.6 Aggrieved appellant-assessee had filed appeal before this Tribunal. Tribunal have allowed the appeal and remanded the matter back to Original Authority vide Final Order No.72610/2018 dated 15.11.2018, by holding as follows:-
"3. We find that an identical issue in the same appellant‟s case stands decided by the Tribunal vide its Final Order No.71844-71845/2018 dated 06.08.2018 and the matter stands remanded for fresh decision in the light of the declaration of law by the Hon‟ble Supreme Court in the case of Commissioner of Central Excise & Customs, Kerala Vs Larsen & Toubro Ltd. reported as 2015-TIOL- 187-SC-ST, another final decision being Final Order No.72057/2018 dated 21.08.2018 in respect of the same assessee have also remanded the matter. By following the said decisions, we set aside the present impugned order and remand the matter to the Original Adjudicating Authority for denovo adjudication in the light of the earlier decision of the Tribunal (supra)."
2.7 In the remand proceedings, matter has been adjudicated as per the impugned order referred in para 1 above. 2.8 Aggrieved by the above order, both appellant-assessee and revenue have filed these two appeals. 3.1 We have heard Shri Dharmendra Srivastava Chartered Accountant for the appellant and Shri A.K. Choudhary Authorized Representative for the revenue.
3.2 Arguing for the appellant learned Counsel submits that- Appellant is engaged in providing Works contract services to Indian Railways, IIT, Kanpur and they also involved to provide services of maintenance and repair for IIT Kanpur. All such services involve transfer of property in goods during execution, VAT is duly discharged by the appellant. The work contract services provided by the appellant are in respect of original work. The services provided in the category of Work Contract Services and the same are not taxable for the entire period.
Service Tax Appeal Nos.70381 of 2022 & 9 70373 of 2020 For the period prior to 01.06.2007 Work Contract Services could not have been taxed as per the decision of Hon'ble Supreme Court in the case of Larsen & Tubro Ltd. 2015 (39) S.T.R. 913 (S.C.).
For the period after 01.06.2007 to 30 June, 2012 Work Contract Services (WCS) in respect of railways are not taxable as per para 1 of the definition, this fact has been admitted by the adjudicating authority and the demand has been duly dropped.
In respect of services provided to IIT, Kanpur, reliance is placed on the decision of Hon'ble Patna High Court in the case of Shapoorji Paloonji & Company Pvt. Ltd., wherein the IIT was considered as a government authority and allowed the exemption from service tax. This decision has been upheld by Hon'ble Supreme Court.
Similar view has been expressed by Chennai Bench of the Tribunal in the case of M/s R R Thulasi Builders India Pvt. Ltd. and in the case of M/s RGP Construction Vs Salem. Thus for the period 01.06.2007 to 30.06.2012 both the services are not taxable under the Service Tax Act. Exemption for the period after 01.07.2012 by Clause 14(a) & 12 (c) of Mega Exemption Notification No.25/2012-ST- services pertaining to construction, erection, commissioning, or installation of original works pertaining to railways are exempt from payment of service tax. Similarly, by Sl. No.12 of the said notification services provided to government, local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration has been exempted from payment of service tax if services provided to railways and IIT. Before 01.07.2012, the valuation could be done as per Rule 2A of Service Tax (Determination of Value) Rules, 2006 or under composition scheme.
Service Tax Appeal Nos.70381 of 2022 & 10 70373 of 2020 After 01.07.2012, valuation shall be done as per Rule 2A after allowing an abatement of 40%/60%/70%, as applicable in case of works contract services. As demand of service tax is confirmed on the maintenance services provided to IIT is unsustainable, demand of service tax liability needs to be set aside. 3.3 Learned Authorized Representative reiterates the findings recorded in the impugned order with regards to confirmation of the demand and the grounds taken in the appeal filed by the revenue in respect of the demands dropped.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 Impugned order records findings as follows:-
"34. I further observe that a simple reading of above definition provides that the following are the pre-requiste for considering a service in to a works contract category;
1. There should be a transfer of property in goods involved in the execution of such contract, and
2. Such transfer of property in goods is leviable to tax as sale of goods (such as sales tax, VAT or WCT, etc.).
3. Such contract is for the purpose of carrying out:
(a) Construction,
(b) Erection,
(c) Commissioning
(d) Installation,
(e) Completion
(f) Fitting out
(g) Repair,
(h) Maintenance
(i) Renovation
(j) Alteration
35. I also find it noteworthy that the words which are used in the definition are "leviable to tax as sale of goods', therefore, it is not necessary that VAT has been actually paid on the transfer of property involved in such contract.
Service Tax Appeal Nos.70381 of 2022 & 11 70373 of 2020 It is enough if transfer of property is leviable to tax as sale of goods for determining whether such contract is a works contract or not.
36. I have gone through the definition of both the services and I notice that works contract covers all the activities from Erection Commissioning to Repair Maintenance and Alteration. If we go by the simple meaning of words, I find that Erectioning is a service provided by the service provider to service recipient for Erection of the plant or machinery or any other fixed asset. Installation service is a service provided by the service provider to service recipient for installation of the fixed asset. By installation we mean putting the fixed asset into a condition ready for its use and Commissioning is a testing service provided by the service provider to service recipient for checking and testing whether the fixed asset is in working condition or not i.e. it's an activity post installation or Erection Whereas the "works contract" service is a composite contract of sale and service i.e. it involves transfer of property in goods and service in relation to the same. Thus in my opinion service contract for 'Erection and commissioning' is a parent and works contract is a specie. Both are contracts of work of 'erection and commissioning'. If such work is pure labour work, it is 'Erection and commissioning' service. If during execution of Erection and commissioning' work, property in goods gets transferred from contractor to customer or in other words from service provider to service receiver, it becomes "work contract".
37. Now I proceed to examine some of the agreements, on sample basis, which are RUD's in the case to determine the exact nature of the contract. In this regard, a specimen sample of party's letter of acceptance No. 255- Dy.CEE/C/NDL/2011-12 dated 25.05.2012 which was executed for Railways, had been taken up for examination. On going through the said work order, it is observed that Service Tax Appeal Nos.70381 of 2022 & 12 70373 of 2020 in the subject matter, Railway was mentioning "design, supply, erection, testing and commissioning of IGBT based Dynamic Reactive Power Compensation Equipment as per RDSO Specification No.TI/SPC/FSL/DRPC/0050 or latest at Traction sub-station at Fazalpur, Knth and Umartali in MB Division". In the schedule enclosed with the said LOA, the quantity of supply, erection-and total amount is mentioned. I observe that the use of word (supply) in the wording of contract itself makes it amply clear that there is supply of material in the contract. Further, in another LOA No. Dy.CEE/C/ALLD/08-09/Tender/72 dated 15.01.09 at point No. 11, it is mentioned that U.P. Trade Tax/W.C. Tax will be deducted from your bills at per extent rule.
38. IN another LOA No. ELCORE/TITSS/Gr.107A/600 Pt-ll dated 16.08.2011, it has been mentioned at point No. 3 that above prices are inclusive of ED,ST and Sales Tax on works contract, Octroi, entry tax and other local levies etc. This contract value excludes the cost of component and material, which you may be called upon to supply under para 1.234 (C) and /or which may be taken over from you under para 1.2.53 of this "Tender Paper". This implies that there is exclusion of price of components which may be required to be used during the course of execution of work
39. Therefore, in view of the discussion made herein above, I am of the considered opinion that service rendered by the party for the Railways is classifiable under the head Works Contract" as it has been established beyond doubt that the contract undertaken by the party involves transfer of goods on which VAT is chargeable.
40. However, w.e.f. July, 2012, the scheme of taxation of services has been shifted from selective taxation to comprehensive negative list based taxation. During this period, I find that the said activities were undertaken by the party for a consideration, which are not covered under the Negative List and hence, such activity comes under the Service Tax Appeal Nos.70381 of 2022 & 13 70373 of 2020 purview of a 'Service' as defined under Section 658(44) of the Finance Act, 1994 (as amended by Finance Act, 2012), and is classifiable under the category of Other Than Negative List' service.
41. I further observe that for the period 01.07.2012 to 31.03.2013 the department proposes demand under the negative list based taxation system introduced w.e.f. 1"July, 2012 However, I find that the exemption has been provided under Entry No.14 of the mega exemption Notification No.25/2012-ST dated 20.06.2012 in relation to services provided by way of construction, erection, commissioning or installation of original works pertaining to an airport, port or railways, Including monorail or metro. I have also noticed that the department denied the exemption on the ground that the exemption has been allowed only in the case of 'original works' and party failed to provide any documentary evidence to establish that the nature of agreement is that of original work, have carefully gone through the said provisions. and I notice that in Entry No. 14 Notification No.25/2012-ST dated 20.06.2012 it has been provided that:
14. Services by way of construction, erection, commissioning. or installation of original works pertaining to-
(a) [*] railways, including monorail or metro;
And original work has been defined as point (y) "original works" has the meaning assigned to it in Rule 2A of the Service Tax (Determination of Value) Rules, 2006; I have carefully gone through the said provisions of Rule 2A of the Service Tax (Determination of Value) Rules, 2006, and I notice that in Explanation it has been provided that:
Explanation 1. For the purposes of this rule-
(a) original works" means
(i) all new constructions;
Service Tax Appeal Nos.70381 of 2022 & 14 70373 of 2020
(ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable,
(iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;
42. Therefore, I observe that the definition not only covers new work but also addition and alteration including erection commissioning or installation. Therefore, in my opinion the work allotted to the party by Railways is squarely covered under the definition of 'Original Work' as defined above. Thus proposed liability on the same deserves to be quashed. I would also like to mentioned that by introduction of negative list based taxation system introduced w.e.f. 1 July, 2012, the system of taxation has changed not the intent of legislation. Therefore, if the Intention of legislation was there to exempt any service, that will remain exempted under the changed regime unless specifically notified by the Government.
43. In view of the above I am of considered opinion that the proposed demand of Service Tax amounting to Rs. 1,95,89,722/- on the work executed by the party for Railways for the period 01.04.2012 to 31.03.2013 is not sustainable in the eye of law and is liable to be dropped.
(b) Management, Maintenance or Repair services-
44. Now take up the demand raised in the show cause notice in respect of the Management, Maintenance or repair services. According to definition of Management, Maintenance or Repair services provided under Notification No. 07/2003 dt. 01.07.2003. "Maintenance of Repair means any service provided by any person under a contract or an agreement in relation to maintenance or repair including reconditioning or restoration or servicing of any goods excluding / another vehicle. It is abundantly clear from the activities of the party that they have Service Tax Appeal Nos.70381 of 2022 & 15 70373 of 2020 provided services in this category such as electrical maintenance of the type, modification of electrical installation, AMC for 33KVA substation, modification of existing capacitor, replacement of defective portion of one main cable, replacement of defective cable LT loop feeder, upgradation & shifting of existing old panel, providing & fixing of switch, socket & data connection, rectification of defects in electrical Installation on complaint basis etc. The aforesaid service is taxable service w.e.f. 01.07.2003 and the liability on this account has been accepted by the party but has paid only a part amount on account of Service Tax. Regarding the payment of balance amount of Service Tax, the party has clearly admitted the receipt of consideration from IIT, Kanpur in lieu of services provided to them, but pleaded that the balance amount of Service Tax has not been realized and they are pursuing for the same. The plea taken by the party is nothing but an argument for sake of argument, which is not in consonance with law. Once the payment is received by the service provider against services provided, the liability is to be discharged in the manner as laid down under provisions of Finance Act, 1994 and Rules framed there under.
45. Under Section 67 of the Finance Act, 1994 the value of taxable services under this category is the gross amount charged which includes the cost of parts and other material sold to the service receiver thus the party is liable to pay the Service Tax along with interest there on gross receipts. The party has even after taking registration under Management, Maintenance or Repair service on 15.06.2009, had deliberately tried to avoid their tax liability.
46. In view of aforesaid provisions, I observe that the activities carried out by the party squarely fall with the ambit of taxable services of Management, Maintenance or Repair service, covered under erstwhile Section 65(105)(zzg) of the Finance Act, 1994 upto June, 2012.
Service Tax Appeal Nos.70381 of 2022 & 16 70373 of 2020 However, w.e.f. July, 2012, the scheme of taxation of services has been shifted from selective taxation to comprehensive negative list based taxation. During this period, I find that the said activities were undertaken by the party for a consideration, which are not covered under the Negative List and hence, such activity comes under the purview of a 'Service' as defined under Section 658(44) of the Finance Act, 1994 (as amended by Finance Act, 2012), and is classifiable under the category of 'Other Than Negative List' service. I therefore hold that the services provided by the party were taxable even during the period with effect from July, 2012.
47 In view of the above, I am of considered opinion that the proposed demand of Service Tax amounting to for Rs. 10,35,364/- on Management, Maintenance or Repair service provided by the party during the period 1.04.2012 to 30.06.2012 and in "other than negative list" for the period 01.07.2012 to 31.03.2013 is sustainable.
48. Now coming to the next point i.e. whether exemption granted by retrospective amendment made in Finance Act, 2012 in respect of Maintenance and Repairs service is applicable in the case. I find that Section 98 of the Finance Act, 2012 provides exemption in respect of Management, Maintenance or Repair of non commercial Government buildings and reads as follows:
98. (1) Notwithstanding anything contained in Section 66, no Service Tax shall be levied or collected in respect of management, maintenance or repair of non-commercial Government bulldings, during the period on and from the 16th day of June, 2005 till the date on which Section 66B comes into force.
49. On analysis of the provisions cited above, it is revealed that services of Management, Maintenance or Repair of non commercial government building shall not be taxable from 16.06.2005 till the date on which Section 66B comes Service Tax Appeal Nos.70381 of 2022 & 17 70373 of 2020 into force which has been made effective from 16.06.2005. If the service provided to IIT, Kanpur is considered exempt for the sake of discussion, every school, college and other institutes imparting education shall be regarded as non- commercial Government institution. In my view all those institutes imparting education on payment of fees are commercial organization. It is a known fact that the Indian institute of Technology Kanpur is an autonomous body which in my view is not a government organization as the term has not been specifically defined under the Act. Further, no evidences have been placed on record to prove that the buildings of the institute are covered under government buildings owned by such government organization. Mere assertion not supported by any documentary evidence or otherwise cannot be a ground for accepting the defence contentions. Under the circumstances, I am of the opinion that Management, Maintenance or Repair Services provided to buildings owned by IIT are not covered under Section 98 of the Finance Act 2012. I note that the activities of maintenance and repairs of electrical items undertaken by the party do not find place in the exemption granted retrospectively vide Finance Act, 2012, thus no relief can be granted on this account"
4.3 Revenue has challenged the findings recorded in the impugned order for dropping the demand made in respect of contract receipts from railways stating as follows:
"6.3 The Adjudicating Authority while passing the impugned Order-In- Original opined that all the work contracts of Railways are squarely covered under the definition of the original work and summarily passed the order by dropping the demand raised against the party. While dropping the demand, Adjudicating Authority has only conducted superficial examination of the few sample work order of the Indian Railways and no in depth examination of work orders, allotted to the party by Indian Service Tax Appeal Nos.70381 of 2022 &
18 70373 of 2020 Railways, has been carried out by the Adjudicating Authority. Without in-depth analysis of work order any exemption cannot be granted merely by superficial examination. The Adjudicating Authority has failed to pass a speaking order. As a matter of the fact, a tax exemption statute or notification needs to be strictly interpreted and the Adjudicating Authority allowed the exemption without going into the details of the contracts awarded to the party by Indian Railways. This has also been clarified by Hon'ble Supreme Court in the case of M/s Sun Export Corporation, Bombay (Civil Appeal No. 3327 of 2007 decided on 30.07.2018) that the burden of proving applicability of exemption notification would be on the assessee 6.4 The case was remanded by Hon'ble CESTAT to Adjudicating Authority for detailed examination in light of the Hon'ble Supreme Court's judgment in the case of Commissioner of Central Excise & Customs, Kerala Vs. Larsen & Turbo Ltd., reported as 2015-TIOL-187-SC. Further the party in their defense reply dated 21.08.2014 which was reiterated by them during de-novo adjudication proceedings at the time of personal hearing on 22.01.2020, have stated that the department has based its demand on perusal of specimen work order only executed for Railways despite the submission of all the copies of work order. This means that party itself is admitting that they have done "work" other than "original work if not ALL. It was therefore incumbent on the Adjudicating Authority to examine all contracts which was expected in the remand order. Furthermore, the Adjudicating Authority in para 27 of the impugned Order-in-Original has stated that only some agreements/work order of the party with the Railways were examined on sample basis this shows that the Adjudicating Authority not only has passed the rder without examining all the material contracts which were dmittedly provided by the party to the department but has not adhered ○ the mandate of detailed examination of the remand order by Service Tax Appeal Nos.70381 of 2022 & 19 70373 of 2020 Hon'ble ESTAT. Thus, Adjudicating Authority while passing the order had neither followed the direction of Hon'ble CESTAT nor taken into account all the aspects brought up by the party and the revenue in this case."
There is examination of the work orders executed by the appellant for the railways in para 37 and 38 (Para 27 of impugned, referred in the appeal of the revenue, is only in respect of remand order of the tribunal). After having examined adjudicating authority has concluded that these pertain to the Original Works. Revenue in their appeal has made a sweeping statement without pointing out to a single order which were in relation to some other activities, which is not in nature of original works in absence of anything specific, we do not find any merits in the appeal filed by the revenue on this account.
4.4 In respect of services provided to IIT Kanpur, we find that the issue is squarely covered by the decision of Hon'ble Supreme Court in the case of M/s SHAPOORJI PALLONJI & COMPANY PVT. LTD.2023 (79) G.S.T.L. 145 (S.C.) / (2023) 11 Centax 180 (S.C.) wherein following has been held:-
"14.Before we commence our analysis, it would be apt to juxtapose the relevant clauses from the Exemption Notification and the Clarification Notification for facility of appreciation :
EXEMPTION CLARIFICATION
NOTIFICATION NOTIFICATION
"governmental "governmental authority"
authority" means a means an 2(s) authority
board, 2(s) or an or a board or any other
authority or any other body;
body established with
(i)Set up by an Act of
90% or more
Parliament or a State
participation by way of
Legislature; or
equity or control by
Government and set
(ii) established by
Service Tax Appeal Nos.70381 of 2022 &
20 70373 of 2020
up by an Act of the Government,
Parliament or a State
with 90% or more
Legislature to carry
participation by way of
out any function
equity or control, to carry
entrusted to a
out any function
municipality under
entrusted to a
article 243W of the
municipality under article
Constitution;
243W of the Constitution;
15.Having read the two definitions, first and foremost, it
is necessary to ascertain the objective behind the
Clarification Notification which amended the Exemption Notification and re-defined "governmental authority". A bare perusal of the Exemption Notification reveals that the exemption therein was only extended to those entities, viz. board or authority or body, which fulfilled the three requisite conditions, i.e. : (a) having been established with 90% or more participation by way of equity or control by Government, (b) set up by an Act of the Parliament or a State Legislature, and (c) carrying out any function entrusted to a municipality under Article 243W of the Constitution. It is evident that the scope of the exemption was severely restricted to only a few entities. Although the reason for re-defining "governmental authority" has not been made available by the appellants, we presume that unworkability of the scheme for grant of exemption because of the restricted definition of "governmental authority" was the trigger therefor and hence, the scope of the exemption was expanded to cover a larger section of entities answering the definition of "governmental authority". An amendment by way of the Clarification Notification was, therefore, introduced which expanded the definition of "governmental authority" and widened the exemption base for service tax to be provided even to an authority or a board or any other body, set up by an Act of Parliament or a State Legislature without the condition of having been established with 90% or more participation by Service Tax Appeal Nos.70381 of 2022 & 21 70373 of 2020 way of equity or control by Government to carry out any function entrusted to a municipality under Article 243W of the Constitution.
16.While the aforesaid interpretation of amended clause 2(s) has been upheld by the Patna High Court, the appellants have countered the same by submitting that the amended definition of "governmental authority" as in clause 2(s) should be interpreted in a manner so as to make the long line under clause 2(s) applicable to both sub-clause (i) and sub-clause (ii). In other words, as per the appellants, to qualify as a "governmental authority"
under clause 2(s)(i), such authority, board or body must not only be a statutory authority set up by an Act of Parliament or a State Legislature but must also have 90% or more participation of the Government by way of equity or control to carry out any like function that a municipality under Article 243W of the Constitution is entrusted to discharge.
17.We have no hesitation to disagree with the latter interpretation sought to be placed by the appellants, for the reasons that follow.
18.In Superintendent & Legal Remembrancer, State of West Bengal v. Corporation of Calcutta [(1967) 2 SCR 170], a nine-judge Bench of this Court, relying upon Craies‟ On Statute Law (6th edn.), stated that where the language of a statute is clear, the words are in themselves precise and unambiguous, and a literal reading does not lead to absurd construction, the necessity for employing rules of interpretation disappears and reaches its vanishing point.
19.This Court in Union of India & Ors. v. Ind-Swift Laboratories Ltd. [(2011) 4 SCC 635 = 2011 (265) E.L.T. 3 (S.C.) = [2011] 30 STT 461 (SC)], held that harmonious construction is required to be given to a provision only Service Tax Appeal Nos.70381 of 2022 & 22 70373 of 2020 when it is shrouded in ambiguity and lacks clarity, rather than when it is unequivocally clear and unambiguous.
20.What is plain and ambiguous from a bare reading of a provision under consideration must be interpreted in the same way as it has been stipulated and not in a way that it presumes deficiency and radically changes the meaning and context of the provision. This is the view expressed in the decision of a five-judge Bench of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. [(1961) 2 SCR 189]. The relevant passage therefrom reads as under :
........ In interpreting a taxing statute, "10. 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 words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed : it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency."
21.It is a well-established principle of statutory interpretation that any authority, entrusted with the function of legislating, legislates for a purpose; it can, thus, safely be assumed that it will not indulge in unnecessary or pointless legislation. This Court, in Utkal Contractors & Joinery (P.) Ltd. v. State of Orissa [(1987) 3 SCC 279], lucidly explained thus :
........ It is again important to remember that "9. Parliament does not waste its breath unnecessarily. Just as Parliament is not expected to use unnecessary expressions, Parliament is also not expected to express itself unnecessarily. Even as Parliament does not use any word without meaning something, Parliament does not legislate where no legislation is called for. Parliament cannot be assumed to legislate for the sake of legislation;
Service Tax Appeal Nos.70381 of 2022 & 23 70373 of 2020 nor can it be assumed to make pointless legislation.
Parliament does not indulge in legislation merely to state what it is unnecessary to state or to do what is already validly done. Parliament may not be assumed to legislate unnecessarily."
22.Having noticed some of the precedents in the field of interpretation of statutes, we now move on to a little bit of English grammar. The word "or" as well as the word "and" is a conjunction; and it is well known that a conjunction is used to join words, phrases, or clauses. On how the conjunctions "or" and "and" are to be read, guidance could be drawn from authoritative texts and judicial decisions. As per Justice G.P. Singh‟s Principles of Statutory Interpretation, the word "or" is normally disjunctive while the word "and" is normally conjunctive. In English law, the position is clear as crystal, as explained by Lord Scrutton in Green v. Premier Glynrhonwy Slate Co. [(1928) 1 K.B. 561, page 569] that one does not read "or" as "and" in a statute unless one is obliged, because "or" does not generally mean "and" and "and" does not generally mean "or".
23.When the meaning of the provision in question is clear and unambiguous by the usage of "or" in clause 2(s), there remains no force in the submission of Ms. Bagchi that "or" should be interpreted as "and". In our opinion, the word "or" employed in clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word "or" in clause 2(s) clearly appears to us to have been used to reflect the ordinary and normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. We are fortified in our view by the decision of this Court in Sri Service Tax Appeal Nos.70381 of 2022 & 24 70373 of 2020 Jeyaram Educational Trust v. A.G. Syed Mohideen [(2010) 2 SCC 513], where it was held thus :
It is now well settled that a provision of "11. a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a court should open its interpretation toolkit containing the settled rules of construction and interpretation, to arrive at the true meaning of the provision. While using the tools of interpretation, the court should remember that it is not the author of the statute who is empowered to amend, substitute or delete, so as to change the structure and contents. A court as an interpreter cannot alter or amend the law. It can only interpret the provision, to make it meaningful and workable so as to achieve the legislative object, when there is vagueness, ambiguity or absurdity. The purpose of interpretation is not to make a provision what the Judge thinks it should be, but to make it what the legislature intended it to be."
24.In the present case, the word "or" between sub-
clauses (i) and (ii) indicates the independent and disjunctive nature of sub-clause (i), meaning thereby that "or" used after sub-clause (i) cannot be interpreted as "and" so as to tie it with the condition enumerated in the long line of clause 2(s) which is applicable only to sub- clause (ii).
25.Applying a different lens, let us test the worth of Ms. Bagchi‟s submission in the light of the punctuations in clause 2(s). It has been held by a Bench of nine Hon‟ble Judges of this Court in Kantaru Rajeevaru v. Indian Young Service Tax Appeal Nos.70381 of 2022 & 25 70373 of 2020 Lawyers Association & Ors. [(2020) 9 SCC 121, para 18] that when a provision is carefully punctuated and there is doubt about its meaning, weight should undoubtedly be given to the punctuation; however, though a punctuation may have its uses in some cases, but it cannot certainly be regarded as a controlling element and cannot be allowed to control the plain meaning. While so observing, this Court considered several decisions as well as the punctuation comma in the relevant provision of the Supreme Court Rules, 2013.
26.What follows is that p unctuation, though a minor element, may be resorted to for the purpose of construction.
27.In the present case, the use of a semicolon is not a trivial matter but a deliberate inclusion with a clear intention to differentiate it from sub-clause (ii). Further, it can be observed upon a plain and literal reading of clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii) closes with a comma. This essentially supports the only possible construction that the use of a comma after sub-clause (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause
(i), the scope of which ends with the semicolon. We are, therefore, of the opinion that the long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after sub-clause (i), followed by the word "or", has established it as an independent category, thereby making it distinct from sub-clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word "and" and without the punctuation semicolon. While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define "governmental authority" whichever way it wished;
Service Tax Appeal Nos.70381 of 2022 & 26 70373 of 2020 however, "governmental authority" was re-defined with a purpose to make the clause workable in contra-distinction to the earlier definition. Therefore, we cannot overstep and interpret "or" as "and" so as to allow the alternative outlined in clause 2(s) to vanish.
28.Let us consider the problem from a different angle. The revised definition of "governmental authority" and the few punctuations in the definition (two semicolons and two commas) and the conjunction „or‟ have been noticed above. Literally read, the conjunction „or‟ between sub- clauses (i) and (ii) clearly divides the two clauses in two parts with the first part completely independent of the second part. The first part is by itself complete and capable of operating independently. A construction leading to an anomalous result has to be avoided and to so avoid, it has to be held that the long line of clause 2(s) starting with "with 90%" and ending with "Constitution" qualifies sub- clause (ii); and, if the conjunction „or‟ is to be read as „and‟, meaning thereby that the portion "with 90% ... Constitution" has to be read as qualifying both sub-clauses
(i) and (ii), then the intention of redefining "governmental authority" would certainly be defeated. As discussed earlier, the purpose for which "governmental authority"
was re-defined must have been to make it workable. We cannot, therefore, resort to a construction that would allow subsistence of the unworkability factor. Assuming what Ms. Bagchi contended is right, it was incumbent for the appellants to bring to our notice, if not by way of pleading, but at least with reference to the relevant statutes, which of the particular authorities/boards/bodies are created by legislation - Central or State - "with 90% or more participation by way of equity or control by Government".
Each word in the definition clause has to be given some meaning and merely because promoting educational aspects is one of the functions of a municipality in terms of Article 243W of the Constitution read with Schedule XII Service Tax Appeal Nos.70381 of 2022 & 27 70373 of 2020 appended thereto is no valid argument unless equity or control by the Government, to the extent of 90%, is shown to exist qua the relevant authority/board/body. Incidentally, neither is there any indication in the petition nor has Ms. Bagchi been able to disclose the identity of any such authority/board/other body which is covered by her argument. No such identified authority/board/body covered by the aforesaid construction of the definition of "governmental authority" in clause 2(s) of the Clarification Notification, which the appellants appeal to us to accept, having been brought to our notice, we are unable to find any fault in the decisions of the Patna High Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL.
29.We need not draw guidance from any of the decisions cited by Ms. Bagchi, except one, on the question of construction of the relevant clause because none of those decisions had the occasion to deal with the issue emanating from the Exemption Notification and the Clarification Notification that we are tasked to consider.
30.Ms. Bagchi heavily relied on the decision of a five- judge Bench of this Court in Dilip Kumar (supra) to urge that in case of any ambiguity in interpreting an exemption notification, the interpretation that favours the revenue must be adopted; also, the burden of proving applicability of the exemption notification would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. At the outset, we record that there is absolutely no quarrel with the proposition laid down therein. We, however, reject the contention of Ms. Bagchi based on Dilip Kumar (supra) because the ratio is not applicable to the facts and circumstances of this case. This, for the simple reason, that there exists no ambiguity insofar as the interpretation of clause 2(s) is concerned. We are endorsed in our Service Tax Appeal Nos.70381 of 2022 & 28 70373 of 2020 opinion by the Latin maxim quoties in verbis nulla est ambiguitas, ibi nulla expositio contra verba expressa fienda est, which means that when there is no ambiguity in the words, then no exposition contrary to the words is to be made. It is, therefore, clear as a sunny day that there arises only one plausible construction of clause 2(s) which is the one the Patna High Court adopted, and which we are inclined to uphold.
31.Ms. Bagchi had submitted that the impugned judgment broadens the scope of the exemption to include vast number of statutory bodies; therefore, unfairly burdening the exchequer. We observe that the authority having the competence to issue a notification completed its job by re-defining "governmental authority" and now it is a task entrusted to the courts to interpret the law. It is, at this juncture, important to notice the law laid down by this Court, speaking through Hon‟ble O. Chinnappa Reddy, J. in Girdhari Lal & Sons v. Balbir Nath Mathur [(1986) 2 SCC 237]. The position of law was affirmed in the following terms :
Where different interpretations are likely "6. to be put on words and a question arises what an individual meant when he used certain words, he may be asked to explain himself and he may do so and say that he meant one thing and not the other. But if it is the legislature that has expressed itself by making the laws and difficulties arise in interpreting what the legislature has said, a legislature cannot be asked to sit to resolve those difficulties. The legislatures, unlike individuals, cannot come forward to explain themselves as often as difficulties of interpretation arise. So the task of interpreting the laws by finding out what the legislature meant is allotted to the courts. Of course, where words are clear and unambiguous no question of construction may arise. Such words ordinarily speak for themselves. Since the words must have spoken as clearly to legislators as to judges, it may be safely Service Tax Appeal Nos.70381 of 2022 & 29 70373 of 2020 presumed that the legislature intended what the words plainly say. This is the real basis of the so-called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the legislature to others as well as judges."
32. Keeping the above-said ratio in mind, an interpretation of the relevant provision resulting in the expanded scope of its operation cannot in itself be sufficient to attribute ambiguity to the provision."
4.5 In view of the above referred decision of the Hon'ble Supreme Court the services provided to the IIT Kanpur are exempt from payment of service tax both prior and post 01.07.2012. Thus, we find merit in the appeal filed by the appellant-assessee.
4.6 As we have allowed the appeal of the appellant on the merits of demand, penalty imposed under Section 76 and 77 (2) of the Finance Act, 1994 are set aside.
5.1 Appeal filed by the appellant is allowed as indicated 4.5. 5.2 Appeal filed by the revenue is dismissed as indicated in para 4.3.
(Order pronounced in open court on-04 April, 2025) (P.K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp