2025-VIL-1991-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 65(105)(zzzza) of Finance Act, 1994 – Rendering of services to Railways – Entitlement of exemption – Appellant is engaged in providing various taxable services – Investigation conducted revealed that Appellant had not discharged their Service Tax liability – After following due process of law, Commissioner confirmed demand of service tax along with interest – Whether Appellant is entitled to benefit of exemption on Commercial or Industrial construction services provided to Indian Railways – HELD – Appellant had undertaken the work of Flash Butt Welding of Rail Joints in connection with construction of roadbed. Work of Flash Butt Welding provided to Railways falls within purview of “original works”, which is exempted from levy of Service Tax under Negative as well as Positive/Pre-Negative list regime of service. Demand of service tax confirmed in impugned order on this issue is not sustainable and hence, it is set aside – Appeal disposed of - Providing of works contract services – Tax liability – Whether Appellant is liable to pay Service Tax on Works Contract Services provided in connection with Railways – HELD – Work has been undertaken for construction of railway bridges, which is specifically exempted from purview of works contract services as defined under Section 65(105)(zzzza) of the Act. No service tax is payable by Appellant on Works Contract Services rendered by Appellant to Railways. Demand confirmed in impugned order on this count is set aside - Export of service – Demand of tax – Whether demand confirmed in impugned order under category of Business Auxiliary Services is sustainable – HELD – Appellant was providing market information and customer lead, customer evaluation, shortlisting and advice in relation to product sales and such services were provided to Pandrol UK, an entity based outside India on principal-to-principal basis. Perusal of documentary evidences submitted by Appellant categorically indicate that services rendered by them to Pandrol, UK would qualify as ‘export of service’, which is not liable to of Service Tax. Demand of Service Tax confirmed in impugned order on this count is set aside - Recovery of equipment hire charges – Whether Appellant is liable to pay Service Tax on staff deputation and equipment hire charges recovered from Joint Venture – HELD – Appellant have entered into a Joint Venture Agreement with GPT Infra projects Limited for executing railways infrastructure work from time to time. In terms of arrangement between parties, profit and loss arising out of contract was to be shared equally in ratio of 50% each. Relation between Appellant and Joint Venture was not that of a service provider and service recipient. Activities undertaken by a partner/co-venturer for mutual benefit of partnership/joint venture cannot be regarded as a service rendered by one person to another for consideration and therefore cannot be taxed. Demand confirmed under this head is set aside - Appropriation of amount – Whether Adjudicating authority is justified in appropriation of amount paid by Appellant during investigation – HELD – Amount paid by Appellant during course of investigation had been collected by Appellant from their clients and hence, said amount is liable to be paid to Government account. Appropriation of this amount as done in impugned order is uphold - Deposit of amount – Entitlement of refund – Whether Appellant is entitled to refund of amount deposited against their service tax liability – HELD – Appellant had paid an amount against their service tax liability. Since no service tax is liable to be paid by Appellant, Appellant is eligible for refund of this amount along with applicable interest.
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