Custom, Excise & Service Tax Tribunal
Damodar Ropeways & Infra Ltd vs Kolkata on 24 September, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 75999 of 2014
(Arising out of Order-in-Original No. 101/Comm/ST/KOL/2013-14 dated 31.03.2014
passed by the Commissioner of Service Tax, Kolkata, Kendriya Utpad Shulk Bhawan,
3rd Floor, 180, Shantipally, Rajdanga Main Road, Kolkata - 700 107)
M/s. Damodar Ropeways & Infra Limited : Appellant
1/A, Vansittart Row,
Kolkata - 700 001
VERSUS
Commissioner of Service Tax : Respondent
Kendriya Utpad Shulk Bhawan, 3rd Floor,
180, Shantipally, Rajdanga Main Road, Kolkata - 700 107
AND
Service Tax Appeal No. 75760 of 2015
(Arising out of Order-in-Original No. 02/Commr/ST-I/Kol/2015-16 dated 30.04.2015
passed by the Commissioner of Service Tax-I, Kendriya Utpad Shulk Bhawan, 3rd
Floor, 180, Shantipally, Rajdanga Main Road, Kolkata - 700 107)
M/s. Damodar Ropeways & Infra Limited : Appellant
1/A, Vansittart Row,
Kolkata - 700 001
VERSUS
Commissioner of Service Tax : Respondent
Kendriya Utpad Shulk Bhawan, 3rd Floor,
180, Shantipally, Rajdanga Main Road, Kolkata - 700 107
APPEARANCE:
Shri Ajay Sanwaria, Advocate for the Appellant
Shri R.K. Agarwal, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NOs.77023-77024 / 2024
DATE OF HEARING: 03.09.2024
DATE OF DECISION: 24.09.2024
Page 2 of 16
Appeal No(s).: ST/75999/2014-DB
& ST/75760/2015-DB
ORDER:[PER SHRI K. ANPAZHAKAN] There are two appeals filed by M/s. Damodar Ropeways & Infra Limited (hereinafter referred to as the 'appellant'). Service Tax Appeal No. 75999 of 2014 was filed against impugned Order-in-Original No. 101/Comm/ST/KOL/2013-14 dated 31.03.2014 passed by the Commissioner of Service Tax, Kolkata. Service Tax Appeal No. 75760 of 2015 was filed against impugned Order-in-Original No. 02/Commr/ST- I/Kol/2015-16 dated 30.04.2015 passed by the Commissioner of Service Tax-I, Kolkata.
1.1. As the issues involved in both the appeals are the same, they are taken up together for decision by a common order.
2. The facts of the case are that the appellant are registered under Service Tax for providing various categories of services such as Maintenance or Repair Services, Transport of Goods by Road, Erection, Commissioning and Installation Services, Works Contract Service, Survey and Map Making Service, Design Service, Commercial &Industrial Construction Service.
2.1. The Appellant was audited for the FY 2008-12, wherein certain Audit Objections were raised by the Audit group. Pursuant to the said objection, a Show Cause Notice No. 06/2014 through C. No. V(15) 320/ST-Adjn/Commr/13/38307 dated 10.01.2014 was issued by Commissioner of Service Tax, Kolkata Commissionerate on the following issues: -
Page 3 of 16Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB Issue Particular Tax Demand I Demand of Service Tax on alleged 47,82,326 operation and maintenance of the Ropeway from Deorali Bazar to Secretariat (Tashiling), at Gangtok provided to the Government of Sikkim II Demand of Service Tax on alleged 12,98,761 operation and maintenance of the Ropeway at Trikut Hill, Deoghar, provided to the Government of Jharkhand III Demand of Service Tax on alleged 1,36,398 operation and regular &periodic repair and maintenanceincluding preventive maintenance of the batteryoperated vehicle and existingroad train and prevailingtrack by providing license fee to the Science City Authority IV Demand of Service Tax on alleged 36,23,317 operation and maintenance of external coal handling system consisting of 9.8 km long bi-cable Aerial Ropeway System at Heavy Water Plant(Manuguru)Khammam, Andhra Pradesh V Demand of Service Tax on Advances 4,42,565 received against various Projects VI Demand of Service Tax on alleged 12,97,057 work for operation and maintenance and repair of the Bridge at Jaleswar, awarded by SE railways VII Denial of Cenvat Credit utilized for 2,92,081 discharging the Service Tax Liability, Tawang VIII Reversal of Cenvatcredit on account 16,67,815 of non-payment to supplier/contractor 2.2. Another Show cause Notice No. 70/2014 through C. No. V(15) 146/ST-Adjn/Commr/14/6506 dated 11.06.2014 was issued demanding service tax of Rs. 85,36,534/- for the period April 2012 to March 2013, as mentioned in the following table:
Page 4 of 16Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB Issue Particular Tax Demand I Demand of Service Tax on alleged 12,61,083 operation and maintenance of the Ropeway from Deorali Bazar to Secretariat (Tashiling), at Gangtok provided to the Government of Sikkim II Demand of Service Tax on alleged 16,84,673 operation and maintenance of the Ropeway at Trikut Hill, Deoghar, provided to the Government of Jharkhand III Demand of Service Tax on alleged 32,857 operation and regular &periodic repair and maintenanceincludingpreventive maintenance of the battery operated vehicle and existingroad train and prevailing track by providing license fee to the Science City Authority IV Demand of Service Tax on alleged 54,12,061 operation and maintenance of external coal handling system consisting of 9.8 km long bi-cable Aerial Ropeway System at Heavy Water Plant (Manuguru) Khammam, Andhra Pradesh V Demand of Service Tax under 1,45,860 Reverse Charge Mechanism on Rent a cab, Security Service, Works Contract Service, Manpower Recruitment Service & Legal Services 2.3. Both the Notices were adjudicated wherein the ld. adjudicating authority hasconfirmed the demands of service tax, along with interest and penalty.
2.4 The breakup of the demands as per both the Orders-in-Original, in respect of the present appeals, is furnished below:Page 5 of 16
Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB Appeal No. Appeal No ST/75760/2015 ST/75999/2014 Issue Particular Apr 12 to Mar Apr 08 to Mar 12 13 Tax Demand Tax Demand Demand of Service Tax on alleged operation and maintenance & repair of the Ropeway from 1 4,782,326 1,261,083 Deorali Bazar to Secretariat (Tashiling), at Gangtok provided to the Government of Sikkim Demand of Service Tax on alleged operation and maintenance of the 2 Ropeway at Trikut Hill, 1,298,761 1,684,673 Deoghar, provided to the Government of Jharkhand Demand of Service Tax on alleged operation and regular & periodic repair and maintenance including preventive maintenance of the 3 136,398 32,857 battery operated vehicle and existing road train and prevailing track by providing license fee to the Science City Authority Page 6 of 16 Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB Demand of Service Tax on alleged operation and maintenance of external coal handling system consisting of 9.8 km long 4 3,623,317 5,412,061 bi-cable Aerial Ropeway System at Heavy Water Plant (Manuguru) Khammam, Andhra Pradesh Service tax liability under 5 145,860 reverse charge (RCM) -
Demand of Service Tax on Advances received against various Projects Vodafone: 22,112/-
6 442,565 -
Abir Construction:
1,854/-
Namchi Project:
2,45,352/-
Demand of Service Tax on alleged operation and 7 1,297,057 -
maintenance & repair of the Bridge at Jaleswar Denial of CENVAT Credit, utilized for discharging 8 292,081 -
the Service Tax Liability, Tawang Reversal of Cenvat on 9 account of non-payment 1,667,815 - to supplier/contractor TOTAL 13,540,320 8,536,534 Page 7 of 16 Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB 2.5. Aggrieved against the confirmation of the demands, the appellant has filed these appeals.
3.Regarding the demands of Service Tax of Rs.47,82,326/- and Rs.12,61,083/- on the operation and maintenance & repair of the Ropeway from Deorali Bazar to Secretariat (Tashiling), at Gangtok provided to the Government of Sikkim and the demand of Service Tax of Rs 12,98,761/- and Rs.16,84,673/- confirmed on the operation and maintenance of the Ropeway at Trikut Hill, Deoghar, provided to the Government of Jharkhand, the appellant submits that as per the agreement, they have operated the Aerial Ropeway by charging value of tickets from the riders of the ropeway. It is their contention that they paid yearly license fee/royalty at specific rate to the Sikkim/Jharkhand Government; rest of the money earned is appropriated by them for operation and maintenance of the said Ropeway.
3.1. The Appellant submits that they were given a license to operate and maintain ropeway by the Government of Sikkim and Jharkhand against a license fee; the service provider was the Government of Sikkim and Jharkhand for providing the right to operate and maintain the ropeway for which a license fee was being paid to the said governments. They submit that the activities undertaken by them are transportation of passengers by ropeway which is not a taxable service; the same was not taxable under any of the category under the positive list and was exempted under Serial No. 23(c) of Notification No.25/2012 ST dated 20.06.2012, under the negative list regime. The appellant contends that the said Page 8 of 16 Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB exemption was removed vide Notification No. 9/2016- ST dated 01.03.2016 with effect from 01.04.2016 and therefore, prior to such date, there was no service tax liability.
3.2. In support of their claim, the appellant relied on the decision of CESTAT New Delhi in the case of M/s Usha Breco Ltd vs. CCE (STA no. 50592 of 2017).
4. Regarding the demand of Service Tax Rs.1,36,398/- and Rs.32,857/- confirmed in the impugned order on the operation and regular & periodic repair and maintenance including preventive maintenance of the battery operated vehicle and existing road train and prevailing track by providing license fee to the Science City Authority, the appellant submits that they were entrusted with the task to collect money from the visitors by selling tickets and giving a part of it to Science city authority as royalty; thus, the money has been collected only for allowing the visitors in to the science city, which is not a taxable service. They submit that the same was not taxable under any of the category under the positive list and was exempted under Serial No. 23(c) of Notification No.25/2012 ST dated 20.06.2012, under the negative list regime.
5. Regarding the demand of Service Tax Rs.36,23,317/- and Rs. 54,12,061/- confirmed in the impugned orders on the operation and maintenance of external coal handling system consisting of 9.8 km long bi-cable Aerial Ropeway System at Heavy Water Plant (Manuguru) Khammam, Andhra Pradesh, the appellant submits that the essence of the contract was Page 9 of 16 Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB transportation of 60,000 MT of coal in a month through the aerial ropeway system. Further, payment for coal transportation was made based on reading taken from the belt weighing scale. It is also submitted that the Department of Atomic Energy (GOI) in the contract awarded to the Appellant had provided that service tax is leviable only on maintenance activity (13.33% of the total operations) and balance is exempt from payment of service. They also discharged Service tax liability on the 'Maintenance part' from time to time for the entire period.
5.1. Further, for the demand on the 'operation part' prior to 01-07-2012, it was submitted that their activities in that case are restricted to transportation of coal in a specific manner and at a specific point which does not in any manner can be described as 'infrastructural support and maintenance services'. Reliance is also placed upon Circular No. 232/2/2006 CX 4 dated 12.11.2007 issued by CBIC, wherein it has been clarified that if transportation of coal is undertaken by mechanical systems, such as ropeway system, no service tax would be chargeable. 5.2. The appellant submitted that they started paying service tax since 01-07-2012 on the entire activity undertaken by them and have paid Rs. 42,95,835 [through Cash of Rs.36,36,634& CENVAT Credit of Rs.6,59,201] out of the total demand of Rs.54,12,061/-.
Page 10 of 16Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB
6. Regarding the demand of Service Tax of Rs.1,45,860/- under Reverse Charge Mechanism on Rent a cab, Security Service, Works Contract Service, Manpower Recruitment Service & Legal Services, the appellant submits that they have already paid the total amount of Service Tax of Rs. 1,45,860/- along with interest of Rs. 44,853/-, towards their dues. The appellant submits that they have no intention to evade payment of tax and paid the service tax along with interest. Since the entire demand confirmed in the impugned order is paid along with interest, they submit that no penalty is imposable on them.
7. Regarding the demand of service Tax of Rs.12,97,057/- on the operation and maintenance & repair of the Bridge at Jaleswar, the appellant submits that the said service related to maintenance of bridges is exempted from payment of service tax.
8.Regarding denial of CENVAT Credit utilized for discharging the Service Tax Liability, Tawang, non- payment of service tax on advances and Reversal of CENVAT on account of non-payment to supplier/contractor, the appellant submits that they have the documents with them readily and if the issue is remanded back to the adjudicating authority, they will be able to explain the issue. Accordingly, they prayed for remanding these issues to the adjudicating authority.
9. In view of the above submissions, the appellant prayed for allowing their appeals.
Page 11 of 16Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB
10. The Ld. Ld. Authorized Representative reiterated the findings in the impugned order.
11. Heard both sides and perused the appeal documents.
12. Regarding the demands of service tax confirmed in both orders, on the operation and maintenance & repair of the Ropeway, we observe that the appellant was awarded the right to operate and maintain the ropeway for which a license fee was paid to the respective state governments. A perusal of the agreements executed by the appellant with the respective state governments clearly reveal that the appellant operated the Aerial Ropeway by charging value of tickets from the riders of the ropeway. They paid yearly license fee at specific rate to the respective governments of Sikkim and Jharkhand. Rest of the money earned is appropriated by them for operation and maintenance of the said Ropeway. Thus, we observe that the appellant has rendered the service of transportation of passengers by Rope Way, which has been specifically exempted from payment of service tax. The activities undertaken by the Appellant by way of transportation of passengers by ropeway was not taxable under any of the category under the positive list and was exempted under Serial No. 23(c) of Notification No.25/2012 ST dated 20.06.2012, under the negative list regime. Accordingly, we hold that the demands of service tax confirmed on this count in the both the orders are not sustainable.
Page 12 of 16Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB
13. Regarding the demand of Service Tax confirmed in the impugned order on the activity of maintenance of the battery-operated vehicle and existing road train and prevailing track in the Science City Authority, we observe that the appellant was entrusted with the task to collect money from the visitors by selling tickets and giving a part of it to Science city authority as royalty. Thus, we observe that the money has been collected only for allowing the visitors in to the science city, which is not a taxable service. The said activity was not taxable under any of the category under the positive list and was exempted under Serial No. 23(c) of Notification No.25/2012-ST dated 20.06.2012, under the negative list regime. Accordingly, we hold that the demands of service tax confirmed on this count in the both the orders is not sustainable.
14. Regarding the demand of Service Tax on the operation and maintenance of external coal handling system, we observe that the essence of the contract was transportation of 60,000 MT of coal in a month through the aerial ropeway system. Further, payment for coal transportation was made based on reading taken from the belt weighing scale. It is also submitted that the Department of Atomic Energy (GOI) in the contract awarded to the Appellant had provided that service tax is leviable only on maintenance activity (13.33% of the total operations) and balance is exempt from payment of service. We observe that the appellant has discharged Service tax liability on the 'Maintenance part' from time to time for the entire period. We observe that the activities of the appellant relating to transportation of coal in a specific manner and at a specific point cannot be Page 13 of 16 Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB considered as infrastructural support and maintenance services. In this regard, we rely on the Board Circular No. 232/2/2006 CX 4 dated 12.11.2007, wherein it has been clarified that if transportation of coal is undertaken by mechanical systems, such as ropeway system, no service tax would be chargeable. We further observe that the appellant started paying service tax w.e.f. 01-07- 2012 on the entire activity undertaken by them and have paid Rs.42,95,835/-(through Cash of Rs.36,36,634 and CENVAT Credit of Rs. 6,59,201] out of the total demand of Rs.54,12,061/-. However, the adjudicating authority failed to adjust this amount against the demand confirmed. Since there is no service tax payable for the period prior to 01.07.2012 and appropriate service tax has already been paid by the appellant for the period after 01.07.2012, there is no further liability on the appellant. However, the issue is remanded back to the adjudicating authority for verification and confirmation of payment of Rs.42,95,835/- as claimed by the appellant.
15. Regarding the demand of Service Tax of Rs.1,45,860/- under Reverse Charge Mechanism on Rent a cab, Security Service, Works Contract Service, Manpower Recruitment Service & Legal Services, the appellant claimed that they have already paid the total amount of Service Tax of Rs. 1,45,860/- along with interest of Rs. 44,853/-. We observe that there is no suppression of facts in this case and the intention to evade payment of tax has not been established. Since the entire demand confirmed in the impugned order is paid along with interest, we hold that no penalty Page 14 of 16 Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB imposable on the appellant. Accordingly, the penalty equal to the tax confirmed on this count is set aside.
16. Regarding the demand of service Tax of Rs.12,97,057/- confirmed in the impugned order on the operation and maintenance & repair of the Bridge at Jaleswar, we observe that the said service related to maintenance of bridges and thus are exempted from payment of service tax. Accordingly, the demand confirmed on this count is set aside.
17. Regarding denial of CENVAT Credit utilized for discharging the Service Tax Liability, Tawang, non- payment of service tax on advances and Reversal of CENVAT on account of non-payment to supplier/contractor, we observe that the appellant has not produced the relevant documents earlier. Now, they claim that they have the documents with them readily and if the issue is remanded back to the adjudicating authority, they will be able to explain the issue. Accordingly, we remand these issues back to the adjudicating authority for the purpose of verification of the documents and pass an appropriate order regarding eligibility of the credit.
18. In view of the above discussions, we pass the following order:
(i) The activities undertaken by the Appellant by way of transportation of passengers by ropeway was not taxable under any of the category under the positive list and was exempted under Serial No. 23(c) of Notification No.25/2012 ST dated 20.06.2012, under the negative list regime.
Accordingly, the demands of service tax Page 15 of 16 Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB confirmed on this count in the both the orders are set aside.
(ii) The demand of Service Tax confirmed in the impugned orders on the activity of maintenance of the battery-operated vehicle and existing road train and prevailing track, is set aside.
(iii) Regarding the demand of Service Tax on the operation and maintenance of external coal handling system, no service tax payable for the period prior to 01.07.2012. The issue is remanded back to the adjudicating for verification and confirmation of payment of Rs.42,95,835/- for the period after 01.07.2012, as claimed by the appellant.
(iv) Regarding the demand of Service Tax of Rs.1,45,860/- under Reverse Charge Mechanism, since the entire demand confirmed in the impugned order is paid along with interest, we hold that no penalty imposable on the appellant.
(v)The demand of service Tax of Rs.12,97,057/- confirmed in the impugned order on the operation and maintenance & repair of the Bridge at Jaleswar, is set aside.
(vi) Regarding denial of CENVAT Credit, utilized for discharging the Service Tax Liability, Tawang, non-payment of service tax on advances and Reversal of CENVAT on account of non-payment to supplier/contractor, these issues are remanded back to the adjudicating authority for the purpose of verification of the documents and pass an appropriate order.
Page 16 of 16Appeal No(s).: ST/75999/2014-DB & ST/75760/2015-DB
19. The appeals filed by the appellant are disposed on the above terms.
(Order pronounced in the open court on 24.09.2024) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd