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Service Tax - Construction of Siding in Railways
M/s NABHA POWER LIMITED Vs COMMISSIONER OF CENTRAL EXCISE & ST, CHANDIGARH
Service Tax - the appellant constructed the siding under the mandatory supervision of Railways - with regard to various payments made to Indian Railways in relation to mandatory supervision the Revenue was of the view that appellant was required to pay service tax on the services received from the Railways for construction of siding from railway station to Thermal Power Plant – demand of service tax under the category of Support services under reverse charge mechanism –
HELD – In terms of various provisions of the Railways Act, Railways includes siding - in the case in hand, the siding has been required to be constructed for transportation of coal upto the plant of the appellant - the appellant themselves have constructed the siding under the supervision of the Railways.
Therefore, they are required to make payment of mandatory departmental chares, cost of OHE work and D&G charges - all these charges have been paid by the appellant for various approvals and supervisions by the Railways for construction of siding by the appellant. The said execution of such work cannot be done without mandatory approvals and supervisions by the railways. In that circumstances, the services in question cannot be termed as Support Services under Section 65B of the Finance Act, 1994 - as per Section 65B (49) of Finance Act, 1994, the approvals and supervision done by the Railways cannot be done by any other party or the appellant.
Therefore, the said service is out of the ambit of 'Business Support Service', therefore, the appellant is not required to pay service tax on their activity - the appellant has also produced a certificate to say that the amount paid by the appellant is paid to the Railways has gone to consolidated fund of India and therefore, the activity undertaken by the Railways for granting various approvals and supervision for siding constructed by the appellant are of statutory in nature and is sovereign function of the Railways.
Therefore, on that account also, the appellant is not liable to pay service tax – answered in favour of assessee