D.P. Jain And Co. Infrastructure ... vs The Commissioner Of Central ... on 18 July, 2016
Bench: S.C. Dharmadhikari
Reserved on 29 th March, 2016
Pronounced on 18 th July, 2016
JUDGMENT:- (Per S. C. Dharmadhikari, J.)
1. On the above writ petition, we had granted Rule on 22 nd
Excise Appeal No. 21 of 2015.
2. Rule on interim relief in the writ petition was made
finally at the stage of interim relief. Hence, by consent of both
this judgment.
Judgment-WP.7890.2015.doc
3. The writ petition is directed against the order-in-original
dated 28th November, 2014 passed by respondent no. 2.
4. The petitioner is a company incorporated under the Indian
mentioned in the cause title. The first respondent is Union of
Excise, Customs and Service Tax, Nagpur. The petitioner is
holding Service Tax Registration No. AACCD1376KST001 under
5. The petitioner is inter alia engaged in the business of:-
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(v) Site preparation, excavation for further construction
of roads either on its own behalf or for the clients having
6. The present dispute pertains to (i) repair and maintenance
formation activity undertaken at roads. The dispute in the
7. In the month of July, 2010, investigations were conducted
8. Following correspondences were exchanged between the
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9. Based on the scrutiny of the records of the services
10.
1994. Interest under section 75 was proposed to be recovered
11. The petitioner filed an elaborate reply dated 1st August,
(vi) The extended period of limitation under proviso to
section 73(1) of the Act could not be invoked because the
Department itself was in doubt about the taxability of the
various activities in relation to road as was apparent from
the Board's circular which was issued on a representation
made by the Nasik Commissionerate and because the details
of receipts made in respect of the services provided were
reflected in the balance sheet of the petitioner's company
which was a public document.
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(vii) Penalties under sections 76 and 78 of the Act could
not be simultaneously imposed for the period in dispute.
12. However, without appreciating the submissions made by
the petitioners, respondent no. 2 passed the order-in-original
dated 28th October, 2011 confirming the demand of service tax of
Rs.10,25,72,125/- along with interest under section 75 of the Act.
The respondent has also imposed penalties of Rs.200/- per day or
2% per month of service tax amount whichever is higher under
section 76,
of Rs.5,000/- under section 77 and of
Rs.10,25,72,125/- under section 78 of the Act.
13. While denying the benefit of exemption under Notification
No. 17/2005-Service Tax on the services, excavation and earth
work, respondent no. 2 observed that the exemption was
applicable only to site formation performed during the course of
construction of road and not to the service rendered at a very far
of place for quarrying metal, etc. He further observes that the
exemption is applicable only if the activity was undertaken in the
course of construction of road and not for maintenance of road.
14. On the point of limitation, respondent no. 2 records a
finding that since the petitioner was also engaged in construction
of roads, its activities of maintenance or repairs of road got
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camouflaged in the balance sheet and that it was after calling for
the records from the petitioner that the Department came to
know about the correct nature of the activities carried out.
15. Being aggrieved with the order-in-original dated 28 th
October, 2011, the petitioner filed Appeal No. ST/26/2012 (along
with Stay Application No. ST/Stay/125/2012) before the
Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on
several grounds.
16. Meanwhile, Finance Act, 2012 was enacted and, thereby,
sections 97 and 98 have been inserted. Section 97 provide for
retrospective exemption to activity of management, maintenance
or repair of road with effect from 16 th June, 2005. Similarly
section 98 provides for retrospective exemption to activity of
management, maintenance or repair of non-commercial
Government building with effect from 16th June, 2005.
17. Relevant portion of both the sections are reproduced
herewith for ready reference:-
"SECTION 97. Special provision for exemption
in certain cases relating to management, etc.
of roads. - (1) Notwithstanding anything contained
in section 66, no service tax shall be levied or collected
in respect of management, maintenance or repair of
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roads, during the period on and from the 16 th day of
June, 2005 to the 26th day of July, 2009 (both days
inclusive) ....."
"SECTION 98. Special provision for exemption
in certain cases relating to management, etc.,
of non-commercial Government buildings. - (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 buildings, during the period
on and from the 16th day of June, 2005 till the date on
which section 66B comes into force ....."
18. The aforesaid stay application came up for hearing before
the appellate tribunal on 30th July, 2012. The petitioner
appeared for hearing and submitted that it is not liable to pay
service tax.
19. However, after hearing both sides, the appellate tribunal,
vide Stay Order No. S/1059/12/CSTB/C-II dated 30 th July, 2012
directed the petitioners to deposit a sum of Rs.3 crores.
20. Being aggrieved and dissatisfied by Order
No.S/1059/12/CSTB/C-I dated 30th July, 2012 in Appeal
No.ST/26/12 passed by the Appellate Tribunal, the petitioner filed
an appeal before this court. This court, vide order dated 29 th
November, 2012 quashed and set aside the stay order and
directed the appellate tribunal to hear the appeal on its own
merits without any requirement of pre-deposit.
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21. Thereafter, the appellate tribunal heard the appeal on
merits and passed Final Order No. A/1264/13/CSTB/C-I dated
29th May, 2013. In this order, the appellate tribunal held that
section 97 and section 98 of the finance Act, 1994, which
provides retrospective exemption to the services, namely,
"repairs and maintenance of roads" and "repairs and
maintenance of non-commercial Governmental buildings" were
not there in the statute book when respondent no. 2 passed the
order as these sections were subsequently introduced.
22. Accordingly, the appellate tribunal remanded the matter to
the original adjudicating authority, namely, respondent no. 2 to
grant the exemption provided under both these sections of the
Finance Act, 2012. The appellate tribunal noted that
maintenance or repair of roads was retrospectively exempted
from the levy of service tax from 16 th June, 2005 onwards and
hence the petitioners are rightly eligible for exemption from
service tax on the repair and maintenance of roads undertaken
by them during the period from 16th June, 2005 to March, 2010.
23. However, the appellate tribunal held that runways cannot
be said to be covered under the term "road" and hence the
exemption extended to repair or maintenance of roads is not
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available with respect to the activity of repair/maintenance of
runways carried out by the petitioner during the disputed period.
24. The appellate tribunal also noted that even though services
of repair, alteration, renovation, restoration or similar services
with respect to roads and airports are excluded from the levy of
service tax under "commercial or industrial construction"
service, the same are still taxable under the taxable head of
"management, maintenance or repair service" defined in section
65(64) of the Finance Act.
25. Aggrieved by that part of the order dated 29th May, 2013
passed by the appellate tribunal, as explained in paragraphs 23
and 24 above, the petitioners preferred an appeal, namely,
central Excise Appeal No. 51 of 2014 before this court.
26. The aforesaid appeal came up for admission before this
court on 13th February, 2015 and this court admitted the appeal
on the following substantial questions of law:-
(a) Whether in the facts and circumstances of the
present case, the impugned order passed by the
appellate tribunal holding that the activities
pertaining to "runway" will not be entitled for
exemption in terms of section 97 and 98 of the
Finance Act is sustainable in law?
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(b) Whether in the facts and circumstances of the
case, the activity of repair and maintenance of
runway undertaken by the petitioners will be
taxable under "management, maintenance or
repair service, even when it is specifically
excluded from the scope of "commercial or
industrial construction service"?
27. A memorandum vide F. No. IV (16) 30-192/ST/Adj./ 2010/
6195-6196 dated 2nd May, 2014 was issued by the
Superintendent to the petitioner to submit written submissions
and appear for personal hearing. The petitioner, vide letter dated
20th May, 2014, informed respondent no. 2 that the appeal filed
by the petitioner against the appellate tribunal's order dated 29 th
May, 2013 is pending before this court and therefore, requested
to await the order of this court.
28. However, respondent no. 2, without even awaiting for the
decision of this court, passed the impugned order dated 28 th
November, 2014 upholding the demand for Rs.5,34,70,601/-.
Respondent no. 2, however, granted the following reliefs to the
petitioner:-
(a) Benefit of section 97 given to the petitioner on
grounds that retrospective exemption is
expressly granted to management, maintenance
and repair of roads from 16 th June, 2005.
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Therefore, to that extent the demand was
dropped.
(b) Further, cum-duty tax benefit was allowed to the
petitioner for they did not collect such service
tax from recipients.
29. The aforesaid order-on-remand dated 28 th November, 2014
passed by respondent no. 2 though appealable order and an
appeal against the same can be filed before the appellate tribunal,
but as the earlier order of the appellate tribunal is already against
the petitioner and is binding on it. Hence, the remedy by way of
appeal is not efficacious and effective.
30. In the light of the above facts, it is submitted that Central
Excise Appeal No. 51 of 2014 is already admitted by this court on
the above reproduced substantial questions of law. No useful
purpose will be served by filing an appeal against the impugned
order dated 28th November, 2014 to the tribunal. In any event,
the tribunal has already taken a particular view of the matter. It
is in these circumstances that the writ petition is filed. We having
admitted it and directed that it will be heard along with the
appeal that the rival contentions now need to be noted.
31. It is submitted that the impugned order is ex-facie
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erroneous and wholly perverse. It is also submitted that it is
incorrect on facts as well as on law. It is a non speaking order.
The second respondent has not rendered findings on the
submissions canvassed by the petitioner before him.
32. Mr. Sridharan learned Senior Counsel appearing for the
petitioner, in support of the writ petition and the appeal
submitted that the show cause notice as well as the order-in-
original fail to classify the activity to be undertaken by the
petitioner. The demand was made in respect of the work
undertaken by the petitioner in three different categories without
providing breakup thereof. Once the petitioner was unable to
explain its case in the absence of such a breakup, then, the
impugned order is ex-facie perverse.
33. Elaborating this argument further, Mr. Sridharan would
submit that the show cause notice does not indicate as to how the
activity undertaken by the petitioner and which is sought to be
taxed by the Department falls under the definition of
"management, maintenance and repair service", "construction of
commercial complex service" and "site formation and excavation
service" as defined under the Finance Act, 1994. The service
provided by the service provider, which is sought to be taxed is
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the core of any show cause notice. The petitioner submits that
the activity undertaken by the petitioner does not fall under
taxable head of "management, maintenance and repair service",
"construction of commercial complex service" and "site formation
and excavation service" as defined under the Finance Act, 1994.
The show cause notice was, therefore, liable to be dropped.
Mr.Sridharan submits that it is well settled that the assessee
must be put to notice as to the exact nature of the contravention
for which he is liable. Mr. Sridharan submits that once the show
cause notice does not provide detailed breakup on which the
demand is based, then, even the impugned order, which fails to
indicate the broad parameters of the demand and the details
thereof, must stand vitiated in law. The entire proceedings,
therefore, deserve to be quashed and set aside.
34. Mr. Sridharan submits that the second respondent has
excluded the portion, which pertains to repair and maintenance
of roads and confirmed the rest of the demand. Under which
category he has confirmed the demand is also not clear.
Therefore, the findings are vague and are unsustainable. They
deserve to be quashed and set aside.
35. Mr. Sridharan submits that the petitioner/appellant is inter
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alia engaged in the business of construction of roads for National
Highway Authority of India, Central Public Works Department
and Nagpur Municipal Corporation. It is also engaged in the
business of construction of runways for Airport Authority of India
Limited. The petitioner also undertakes works of repair and
maintenance of road like strengthening and renewal of road.
Similarly, it undertakes repair and maintenance like improving
and surfacing of runways, taxiways/apron ways.
36.
Mr. Sridharan submits that the present dispute pertains to
(i) repair and maintenance of roads and (ii) repair and
maintenance of airport runways/taxiways/apron ways. The
period in question is 16th June, 2005 to 27th July, 2009. 16th
June, 2005 is the starting point of demand, since from that date
only management, maintenance or repair service included
immovable property. That is also the date from which the
construction service became taxable. However, the demand could
be raised only up to 27th July, 2009 since on that date,
Notification No. 24/2009-ST was issued exempting management,
maintenance or repair service relating to road. Thus, after 27 th
July, 2009, show cause notice itself did not demand service tax
except in case of two invoices wherein the demand had been made
perhaps due to oversight. No show cause notice could have been
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issued for any subsequent period though the activity has
remained the same. Mr. Sridharan submits that all contracts
entered into with the customer involved the supply of material as
well as the supply of services. In other words, none of the
contracts entered into with the customer are pure labour or pure
service contracts. They are in the nature of works contract. The
petitioner/appellant has duly paid sales tax on all the contracts
involved in the present case treating the same as works contract.
The same is also duly reflected in the sales tax returns filed by
the petitioner/appellant.
37. Mr. Sridharan submits that the specification for
construction/repair of road is prescribed by Indian Road Congress
(IRC). The same specification is followed for construction/repair
of runways as well. The activity of repair and maintenance of
runways referred to in the present case involves the runways,
which means the strip, where the aircraft lands or takes off.
Taxiways are road on which the buses or any other vehicle ply
within the airport premises. Apron roads are roads wherein the
aircraft moves to the parking area after landing/take off. The
method of construction/specification in terms of thickness of the
layers and other parameters for all the three portions, namely,
runway, taxiway and apron road are the same. Mr. Sridharan
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submits that upon the show cause dated 14th October, 2010, the
initial order-in-original dated 28th October, 2011 was passed
confirming the demand. That order was challenged before the
CESTAT, Mumbai. During the pendency of the appeal before the
CESTAT, Finance Act, 2012 was enacted. By this enactment,
sections 97 and 98 have been inserted in Chapter V of the
Finance Act, 1994. Section 97 of the Finance Act, 1994 provided
for retrospective exemption to activity of management,
maintenance and repairs of road with effect from 16th June, 2005.
Similarly, section 98 of the Finance Act, 1994 provided for
retrospective exemption to activity of management, maintenance
and repairs of non-commercial Government buildings with effect
from 16th June, 2005.
38. In the initial order dated 29th May, 2013, the CESTAT
remanded the matter back to the adjudicating authority for
considering the plea for grant of exemption under sections 97 and
98 of the Finance Act, 1994. The adjudicating authority was
directed to consider the plea of the petitioner for exclusion of the
value of the material and also the plea that majority demand of
tax is barred by limitation.
39. Mr. Sridharan submits that in the remand order dated 29 th
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May, 2013, the CESTAT held against the appellant on two counts,
namely the runways cannot be said to be covered under the term
"roads" and hence the exemption extended to repair or
maintenance of roads under section 97 of the Finance Act, 1994
is not available with respect to the activity of repair/maintenance
of runways carried out by the petitioner. Secondly, though
services of repair, alteration, renovation, restoration or similar
services with respect to roads and airports are excluded from the
levy of service tax under "commercial or industrial construction
service" vide clause 65(25b) read with section 65(105)(zzq), the
same are still taxable under "management, maintenance or repair
service" as defined in section 65(64) of the Finance Act, 1994
read with section 65(105) thereof.
40. Mr. Sridharan would submit that commercial or industrial
construction service was introduced as taxable service under the
head "construction service" with effect from 10 th September,
2004. The service was renamed as "commercial or industrial
construction service" with effect from 16th June, 2005. Inviting
our attention to the definition of the term "commercial or
industrial construction service" as appearing in the Finance Act,
1994, Mr. Sridharan would submit that if these definitions are
read together with the definition of the term "repair" as
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appearing in the Finance Act, 1994 and as appearing in section
2(b) of the Airport Authority of India Act, 1994, it would be
apparent that repairs of road and airport is specifically excluded
from the definition of commercial and industrial construction.
Once it is so excluded, the same cannot be taxed under any
general category of management, maintenance or repair service.
Mr. Sridharan submits that specific exclusion from one taxable
clause will prevail over general description in another taxable
clause. Mr. Sridharan submits that clause 65(25b) of the Finance
Act, 1994 inter alia relating to maintenance or management of
immovable property is demonstrative of the fact that
repair/maintenance is mentioned in both clauses. Thus, rate of
tax is otherwise the same for both clauses. Determination of
value and all other provisions of Chapter V of the Finance Act,
1994 is identical to both these clauses. If specific exclusion has
been granted to the activity of repair and maintenance of roads
and airport from the definition of commercial or industrial
construction service under section 65(25b) of the Finance Act,
1994, it would be illogical to suggest that it is still covered under
taxable head "maintenance or repair service". This would render
the exclusion granted to the activity of repair and maintenance of
roads under taxable head of "commercial or industrial
construction service" redundant.
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41. Mr. Sridharan submits that it could never be the intention
of the legislature to grant exclusion under one head and to tax the
same activity under different head. The legislature never intends
to give or confer by one hand and take the same away by the
other. Once any interpretation which creates redundancy is to be
avoided, then, applying the principle in the judgment of the
Hon'ble Supreme Court of India in the case of Tahsildar Singh vs.
State of Uttar Pradesh1, in the submission of Mr. Sridharan, we
must hold that the tribunal's and that of respondent no. 2 views in
their order are wholly unsustainable and they deserve to be
quashed and set aside.
42. Mr. Sridharan, after relying on another principle laid down
in several decisions of the High Courts and the Hon'ble Supreme
Court of India submitted that the reasons assigned by the CESTAT
are erroneous and unsustainable. Mr. Sridharan submits that the
tribunal's order is based on an assumption that if repair and
maintenance of roads and airport is held as not falling under
"commercial and industrial construction service", then, there
would be no need to retrospectively exempt the same activity by
interpretation of section 97 of the Finance Act, 1994. The repair
and maintenance of the road/airport was taxable earlier under
1 1959 (Supp.) (2) SCR 875
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the category of repair and maintenance service and in order to
grant exemption to such activity, retrospective amendment has
been made. This is an erroneous assumption on which the
tribunal proceeds. Mr. Sridharan submits that this assumption
runs counter the intent of the legislature. The intent of the
legislature is to grant exemption as an abundant caution. The
legislature acted in public interest. Mr. Sridharan submits that
when legislature acts in this manner, the legislation cannot be
defeated and frustrated. The tribunal has precisely done that
according to Mr. Sridharan.
43. Mr. Sridharan's second contention is that "road" is a genus
of which runway is the species. The repair services rendered
qua runway will also be exempt in terms of section 97 of the
Finance Act, 1994. Mr. Sridharan submits that the term "road" is
a broad term and "runway" is species of the road and therefore,
the retrospective exemption given to road under section 97 of the
Finance Act indeed applies to runway as well. Mr. Sridharan has
relied upon the meaning of the term "road" as provided in the
Chambers Dictionary, 1993 at page 1487. He also relies upon the
meaning of term "runway" as provided in the dictionary and
according to him, they refer to nothing but a 'track' suitable for
certain types of wheeled vehicles, namely, motor car, bus, aircraft
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etc. In these circumstances, runway cannot be left out or
excluded from this broad concept of road. Mr. Sridharan has
relied upon a judgment of a Division Bench of this court in the
case of Union of India vs. Authority under the Minimum Wages
Act2.
44. It is then contended by Mr. Sridharan that runway is part of
airport only. The benefit of section 98, which provides
retrospective exemption to repair/maintenance services provided
to non-commercial Government buildings, has to be extended to
runways of airports as well. Mr. Sridharan would submit that
runways, taxiways and apron ways/apron taxi tracks are all
parts of building of airport. The building includes not only the
land appurtenant thereto but the civil structures built on such
appurtenant land. Therefore, what applies to repair and
maintenance of a non-commercial government building equally
applies to the activity carried out for preserving the structures.
Mr. Sridharan submits that airports do not carry on any
commercial activity. In any case, later part of the demand
pertains to defence airports at Yelakhana and Bidar which are
exclusively used for defence operations. In such circumstances,
when the definition of the term "airport" appearing in section
2 AIR 1969 Bom. 380
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2(b) of the Airports Authority of India Act, 1994 can be safely
utilised and it includes the runways, then, it would be absurd to
suggest that maintenance and repairs done to a road/open
parking lot in a society building would not be considered a part of
the building. In the circumstances, retrospective exemption
provided to non-commercial Government buildings under section
98 of the Finance Act, 1994 equally applies to runways as well
being part of the airport building.
45.
Lastly, it is submitted that the service in question is a
works contract or repairs and maintenance. The works contract
pertaining to roads and airport are excluded from the ambit of
works contract service. The same cannot be covered under the
category of repair and maintenance service as the said taxable
head will cover only service simplicitor and not works contract.
Mr. Sridharan submits that 60% of the value of the total contract
is attributable to material supply. In these circumstances, even
on this ground, this court should allow the writ petition and grant
all the reliefs. Mr. Sridharan has relied upon the definition of the
term "works contract" under the Finance Act, 1994. He submits
that upon a plain reading of this definition, it would be evident
that works contract with respect to road, airport have been
excluded from the levy of service tax. The transaction involved
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in the present case is composite. If it is composite contract of
repairs and maintenance of roads and airport runways and
excluded from the definition of the word "works contract" itself,
then, they are not taxable under the works contract service.
Then, repairing of roads/airport are not taxable under the works
contract service.
46. Then, it is submitted that the order of the Commissioner
demanding tax of Rs.37,79,784/- is incorrect.
ig This is under
category of site formation, excavation services. The
commissioner held that the activity was performed at a place
very far off from the site of construction and was undertaken for
excavating the material which was required for road making
situated away from the actual place where the road was to be laid.
That is why the Commissioner held that the activity in question
was done far away from road and does not qualify as exemption
under Notification No.17/2005-ST. If that activity was away from
the road and did not qualify for exemption, then, it is evident that
it will not fall under the category of site formation, excavation
service site formation. Even if the activity is recorded as site
formation, it is not taxable under Notification No. 17/2005-ST.
Mr. Sridharan submits that the Commissioner has not excluded
the value of material. The tax is on service. The value of the
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material is not liable to service tax and should have been
excluded. It is incorrect to hold that no evidence is produced. Mr.
Sridharan submits that at least for this purpose, the matter
should be remanded back to the commissioner.
47. Mr. Sridharan submits that the demand is barred by
limitation. The issue in the present case involves interpretation
of law. The petitioner/appellant was of the bonafide view that
they are not liable to pay service tax. The customers are also
Government. The service tax being an indirect tax and
eventually the liability is of the customers, then, all the more
penalty was not leviable. For all these reasons, Mr. Sridharan
would submit that the penalties deserve to be waived.
48. In support of the above contentions, Mr. Sridharan has
relied upon the following decisions:-
(i) Dr. Lal Path Lab Pvt. Ltd. vs. Commissioner of C. Ex.,
Ludhiana, 2006 (4) STR 527 (Tri. Del.)
(ii) Commissioner of C. Ex. Ludhiana vs. Dr. Lal Path Lab
(P) Ltd., 2007(8) STR 337 (P & H)
(iii) Commissioner of Customs, Central Excise vs. Federal
Bank Limited, 2013 (29) STR 554 (Ker.)
(iv) Commissioner of Central Excise and Customs, Kerala
vs. M/s. Larsen and Toubro Ltd., 2015 TIOL 187 SC-ST
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(v) Tahsildar Singh and Anr. vs. State of U. P., 1959
Supp (2) SCR 875
49. Mr. Jetly appearing for the respondents fully supports the
impugned order. Mr. Jetly submits that the petition is devoid of
merits and deserves to be dismissed. Mr. Jetly submits that the
demand was rightly raised. It should be sustained for the
petitioner/appellant is indulging in hairsplitting. It is aware of
the fact that it has rendered taxable services. It is aware of the
fact that service tax is demanded by the Department/Revenue on
the basis of clear provisions of law. When such a demand is
raised, it is resisted only to avoid making payment to the
Government. The assessee has resorted to trickery and partially
succeeded in defeating the demand. The delay in adjudication
and repeated remands defeats justice. Once the view taken by the
authorities is possible and permissible in law, then, this court
should not, in its extraordinary and equitable jurisdiction under
Article 226 of the Constitution of India, interfere with pure
finding of fact. The view taken is neither perverse nor vitiated by
error of law apparent on the face of the record. Hence, the writ
petition be dismissed.
50. Mr. Jetly has relied upon the following judgments.
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(i) M. C. Mehta vs. Union of India, AIR 1999 SC 2367
(ii) Roshan Lal and Ors. vs. International Airport
Authority of India and Ors., AIR 1981 SC 597
51. For properly appreciating the rival contentions, a brief
reference to the allegations in the show cause notice is necessary.
The show cause notice was issued on the basis of the intelligence
gathered. That revealed that the petitioner/appellant is engaged
in providing management or repair of goods, equipments or
properties service, commercial and industrial construction
service and site formation and clearance, excavation and
earthmoving and demolition service to various agencies like
Airport Authority of India, Municipal Corporation of the City of
Nagpur and CPWD etc. The intelligence also revealed that the
petitioner is providing services such as repairs and strengthening
of roads, improvement and resurfacing of runways, periodical
renewal of National Highways etc. and construction of toll plazas
to said agencies and receiving crores of rupees for this purpose.
52. After referring to the definition of the above services, as
appearing in the Finance Act, 1994, it was alleged that the
records of the petitioner for the years 2005-06 to 2009-10 were
called for by letters and which were replied by the
petitioner/assessee. On scrutiny of all the materials produced,
including the statements of the authorised signatory, it is alleged
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that the activity of strengthening, repairs and black topping of
roads is undertaken on the already existing road. It also appears
that the activity of strengthening of road is altogether distinct
from that of building or construction of a new road. Further, it
appears from the definition of the "management, maintenance or
repair service" that the work of strengthening or repairs of road
amounts to providing of service in relation to management,
maintenance or repair of properties. The notifications exempting
the services of maintenance or repairs of roads from whole of the
service tax leviable thereon with effect from 27 th July, 2009 has
been specifically referred in the show cause notice. It is,
therefore, alleged that for the subject period, the
petitioner/appellant had undertaken the work of providing
taxable service of management, maintenance, repair of
immovable property, commercial construction, site formation and
excavation service. In these circumstances, the taxable service
being rendered, the service tax, inclusive of education cess should
have been deposited in the Government Treasury. The service
tax liability to the extent of Rs.10,25,72,125/- was thus
determined and the amount demanded.
53. The response of the petitioner/appellant has been that the
definitions under the Finance Act, 1994 and the exemption
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notifications based thereon would reveal that the excavation and
earth work has been carried out for construction of roads.
Notification No. 17/2005-ST dated 7th June, 2005 grants total
exemption from service tax on site formation and excavation
services, when rendered in the course of construction of roads.
As such, out of the total value of taxable services attributable to
the site formation, construction of roads is liable to be excluded
and the service tax demand cannot be confirmed accordingly.
54.
In relation to the other demand under the category of
commercial and industrial construction, that as well is not
justified and the explanation for the same has been provided in
para 8 of the reply to the show cause notice at page 108 of the
paper book.
55. As far as the dispute with regard to services falling under
the category of management, maintenance and repairs, the
attention of the Revenue was invited to Board Circular
No.110/04/2009-ST dated 23rd February, 2009 with regard to
levy of service tax on maintenance and repairs of road. Para 3 of
the circular has been relied upon and it has been submitted that
activity of extension/resurfacing, strengthening rendered in
connection with runways within the area of airport cannot be
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equated with a road by relying on this circular. This response of
the petitioner is to be found in para 9 of the reply to the show
cause notice at page 109 of the paper book. Thereafter, the reply
sets out in details as to how service tax could not have been levied
in relation to the services rendered and covered by the show
cause notice. We need not advert to this reply any further for the
simple reason that the contentions raised therein based on some
judgments of courts of law have already been referred by us
hereinabove. In the order passed on 28 th October, 2011, the
adjudicating authority reproduced the allegations in the show
cause notice and the reply thereto in para 14 of the order and
held that the main issues to be decided are whether the activities
of the petitioner are classifiable and taxable under the category of
site formation, maintenance or repair of property and
construction of complex and whether the demand is hit by
limitation. Finally, whether the petitioner is liable for payment of
interest under section 75 of the Finance Act, 1994.
56. The order refers to the wording in Notification No. 17 of
2005 dated 16th June, 2005, which exempts the site formation
and clearance, excavation and earthmoving and demolition, any
such other and similar activities referred to in sub clause (zzza)
of clause (105) of section 65 of the Finance Act, 1994 provided to
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any person by any other person in the course of construction of
roads, airports, railways, transport terminals, bridges, tunnels,
dams, ports or other ports. Thus, if the activity of site formation,
excavation to be exempted must be rendered in the course of
construction of roads, airports and runways etc., that does not
apply to the activity of site formation which was performed at a
place very far off and not on the actual site of road making and
was undertaken for excavating the material which was required
for road making, namely quarrying of metal, murrum etc. from a
place situated away from the actual place where the road was to
be laid. Thus, it was on the petitioners to establish that they were
entitled to the exemption and mere averment that the said
activity was done for road making would not enable them to claim
exemption. The view taken was that the notification would be
applicable to those cases where the activity of site formation was
undertaken at the site of road making and not otherwise, namely,
the place from where rubble etc. would be excavated and brought
at the site of road making. This notification also would not be
helpful when the activity undertaken by them pertained to
maintenance of road. The distinction, thus, was made between an
activity styled as construction of road and which is termed as
distinct from maintenance of road. It was held that the
petitioners did not submit any documentary evidence to indicate
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that the said activity was undertaken by them for construction of
road and not for maintenance of road. That is why the
petitioner's submissions were rejected.
57. As far as other aspect is concerned, namely, maintenance,
management and repair service, the findings are as under:-
".....
iii. It is noteworthy to mention that it has not been
disputed by the noticee that they had undertaken the
activity of repairs and maintenance in so far as the same
relate to the runway and road. On the contrary in the
statement of Mrs. Vandana Gupte, Additional General
manager, (Fin.) recorded under section 14 of the Central
Excise Act, 1944 on 24.09.2010 she has inter alia stated
that the term ST BT appearing in the contract mean
Strengthening and Black Topping of roads. That they
had undertaken the work of Resurfacing of Runway,
Apron Taxiways and Strengthening of Apron Taxiways
and also the work of BT Renewal of certain roads which
required relaying the Black topping to the roads e.g. in
the case of Sonegaon Bela Sirsi Road. That the work of
Short Term Improvement and routine maintenance
undertaken by us during the year 2008-09 and 2009-10
for Nagpur-Hyderabad section was a composite contract
involving execution of reconstruction of part of damaged
road and other ancillary activities to maintain smooth
flow of traffic. That the contract for periodical renewal
involved a wide scope of work including repairs, renewal,
making good damages caused to the road. That they had
undertaken the work of repairs of runway at Air Force
Station at Bidar and also of strengthening and
resurfacing of taxi tracks at Air force Station at
Yelahanka.
iv. Thus even STBT (Strengthening and Black
Topping) was an activity including strengthening of road
which clearly falls under the category A (III) of the
circular no. 110/4/2009-S.T., dated 23-2-2009 as
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taxable being maintenance. The circular is very vivid
and is binding on the officers of revenue. In view of the
same I find that the submissions of the noticee as
regards to taxability are not at all tenable and rejected.
15.1. In view of the above findings, I hold that the
demand of Rs.102572125/- raised under show cause
notice F. No. IV(16)30-192/ST/ADJ/2010/24872, dated
14-10-2010 is recoverable from the notice.
15.2. The show cause notice issued by Additional
Director General, DGCEI, Zonal Unit Mumbai vide F. No.
DGCEI/MZU/I&IS"D"/30-16/10/1076, dated 18-02-2011
answerable to the Commissioner Central Excise Nagpur
pertains to the period June, 2008 to July, 2009. The
show cause notice proposed recovery of service tax of
Rs.85,64,006/- under the service category of
"Management, Maintenance or Repair Service". The
period, amount and service of this show cause notice
have been covered in show cause notice dtd 14.10.2010
issued by the Commissioner of Central Excise, Nagpur,
for an amount of Rs.102572125/-. Accordingly, both the
show cause notices are disposed off with this Order in
Original."
58. On the point of limitation, the initial order passed in 2011
held that the demand in the case has been prepared after calling
for copies of the contracts, studying the nature of work
undertaken, which was not forthcoming from the balance-sheet,
but after scrutiny of the various documents. The case of the
petitioner was that since it has registered itself for varied
services under the Finance Act, 1994, there cannot be any
suppression. The order observes that merely because
registration has been obtained does not mean that the petitioner
has declared all its activities to the Department. The balance-
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sheet is not the document which would display on its face all the
activities particularly the bifurcation between construction and
maintenance or repair activities. They were camouflaged in the
balance-sheet. Hence, till the details were submitted by the
petitioner, it was not clear as to whether it was engaged in any
activity of maintenance or otherwise. Further, the petitioner was
working under self assessment. It was not for the Department to
inform the petitioner as to how it should compute their tax
liability. Thus, it was its bounden duty to have correctly assessed
the service tax duty. The value of taxable service escaped
assessment of service tax on account of the failure to disclose the
relevant information to the Central Excise Department. That is
how a conclusion was reached that the petitioner had suppressed
facts to evade payment of service tax. Therefore, invocation of
the extended period of five years is justifiable. The initial order of
2011 placed reliance upon several judgments of the tribunal, in
which such a view has been taken.
59. Even on the aspect of interest and penalty, the initial order
did not uphold the claim and the contentions of the petitioner.
60. This order was challenged in appeal before the CESTAT,
West Zonal Bench, Mumbai. Application for stay was also made
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and from the record, it appears that an order was passed on the
stay application on 30th July, 2012 directing deposit of Rs.3
crores. That was on the prima facie view as reflected from that
order.
61. This order on the stay application was challenged before
this court in Central Excise Appeal (L) No. 137 of 2012 and on
29th November, 2012, this appeal was allowed and the interim
order of the tribunal was set aside.
62. Thereafter, Appeal No. ST/26/2012, which challenged the
order passed by the Commissioner of Central Excise, Nagpur on
28th October, 2011 was heard finally. The tribunal noted the rival
contentions and in para 5.1 held that the petitioner/appellant has
undertaken maintenance/repair or roads in addition to
repair/maintenance of runways. Wide Notification No. 24/2009,
maintenance/repair of roads was exempted from the levy of
service tax and such exemption was given retrospective effect
vide section 75 of the Finance Act, 2012 for the period starting
from 16th June, 2005 onwards.
63. This part of the tribunal's order having already been
complied with by the Commissioner, as is apparent from para
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11.1 of the impugned order at page 81 of the paper book, we need
not dwell on the same any further.
64. The tribunal's finding and which is mainly impugned before
us is contained in para 5.2. There, it is held that in the absence of
a specific exemption in respect of maintenance or repairs of
runways, the benefit of service tax exemption available in respect
of roads cannot be extended to runways.
65.
The appellant/petitioner relied before the tribunal on
Notification No. 24/2009-ST dated 27th July, 2009, which granted
exemption to services provided in relation to management,
maintenance or repair of roads. That notification reads as under:-
"Notification: 24/2009-S. T. dated 27-Jul-2009
Roads - Exemption from Service Tax to
management, maintenance or repair of roads
In exercise of the powers conferred by sub-section
(1) of section 93 of the Finance Act, 1994 (32 of 1994)
(hereinafter referred to as the Finance Act), the Central
Government, on being satisfied that it is necessary in the
public interest so to do, hereby exempts the taxable
service, referred to in sub-clause (zzg) of clause (105) of
section 65 of the Finance Act, 1994, provided to any
person by any other person in relation to management,
maintenance or repair of roads, from the whole of the
service tax leviable thereon under section 66 of the said
Finance Act."
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66. A perusal of this notification reveals that the Central
Government, on being satisfied that it is necessary in the public
interest so to do, exempts the taxable service referred to in sub
clause (zzg) of clause (105) of section 65 of the finance Act, 1994,
provided to any person by any other person in relation to
management, maintenance or repair of roads. Section 65 is
contained in Chapter V of the Finance Act, 1994. Section 65
contains several definitions and we are concerned with clause
(105), which defines "taxable service" to mean any service
provided or to be provided to any person by any person in
relation to management, maintenance or repair. Then, reliance is
placed upon the definition of the term "airport" as appearing in
the Finance Act, 1994. That definition is to be found in section 65
clause (3c). That reads as under:-
"65(3c) "airport" has the meaning assigned to it in
clause (b) of section 2 of the Airports Authority of India
Act, 1994 (55 of 1994)."
67. Then, reliance is placed upon the definition of the "airport"
as appearing in section 2(b) of the Airports Authority of India
Act, 1994. that definition reads as under:-
"2(b) "airport" means a landing and taking off area
for aircrafts, usually with runways and aircraft
maintenance and passenger facilities and includes
aerodrome as defined in clause (2) of section 2 of the
Aircraft Act, 1934 (22 of 1934)."
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68. The argument is that the charging section applies both the
clauses, namely section 65(64) and section 65(105) uniformly.
Mr. Sridharan submits that repairs of road and airport is
specifically excluded from the definition of industrial
construction. Hence, the same cannot be taxed under another
general category, namely, "management, maintenance or repair
service". Specific exclusion from main taxable clause will prevail
over a general description in another taxable clause. In that
regard, Mr. Sridharan has relied upon section 65(25b) of the
finance Act, 1994. The same reads as under:-
"65(25b) "commercial or industrial construction"
means -
(a) construction of a new building or a civil
structure or a part thereof; or
(b) construction of pipeline or conduit; or
(c) completion and finishing services such as
glazing, plastering, painting, floor and wall tiling, wall
covering and wall papering, wood and metal joinery and
carpentry, fencing and railing, construction of
swimming pools, acoustic applications or fittings and
other similar services, in relation to building or civil
structure; or
(d) repair, alteration, renovation or restoration
of, or similar services in relation to, building or civil
structure, pipeline or conduit,
which is -
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(i) used, or to be used, primarily for or
(ii) occupied, or to be occupied, primarily, with;
or
(iii) engaged, or to be engaged, primarily in,
commerce or industry, or work intended for commerce
or industry, but does not include such services provided
in respect of roads, airports, railways, transport
terminals, bridges, tunnels and dams."
69. His argument is that commercial or industrial construction
service was introduced as taxable service under the head
"construction service" with effect from 10 th September,
2004. The same service was renamed as "commercial or
industrial construction service" with effect from 16th June,
2005. Though it refers to repair, alteration, renovation etc.,
but that does not include such services provided in respect
of roads, airports, railways, transport terminals, bridges,
tunnels or dams. If that is excluded from commercial or
industrial construction, then, the same cannot be taxed
under another general category of management,
maintenance or repair service.
70. We are unable to accept this contention and for more than
one reason. We are not concerned here with the wisdom of the
legislature in taxing services and of varied categories. Merely
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because repair of road and airports is specifically excluded from
the definition of commercial or industrial construction does not
mean that it cannot form part of other taxable service. That
apart, if one carefully analyses section 65(25b) of the Finance
Act, 1994, it would be apparent that it defines the words or
expression "commercial or industrial construction". It inter alia
means, repair, alteration, renovation, restoration of or similar
services in relation to building or civil structure, pipe line or
conduit, but that ought to be used or to be used primarily for or
occupied or to be occupied primarily with or engaged or to be
engaged primarily in commerce or industry, or work intended for
commerce or industry. From that service, the legislature
excluded services provided in respect of roads, airports,
transport terminals etc. The reason is obvious because the
section contains a definition. The service provided could be for
maintenance of utilities. Such maintenance may also include
repairs. Therefore, the legislature thought it fit to bring it within
maintenance or repair service under section 65(64) and while
doing so, it firstly defined "management, maintenance or repair
service" to mean any service provided by any person under a
contract or an agreement for a manufacturer or any person
authorised by him in relation to management of properties,
whether immovable or not, maintenance or repair of properties,
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whether immovable or not or maintenance or repair including
reconditioning on restoration, or servicing of any goods,
excluding a motor vehicle and also substituted it by the Finance
Act, 2006 with effect from 1st May, 2006. It also substituted the
Explanation below section 65(64) with effect from 15 th May,
2008 to state that for the purpose of section 65(64) "goods"
includes computer software and "properties" includes
information technology software. However, when the legislature
brought in the concept of "taxable service" by section 65(105)
and defined it to mean any service provided or to be provided to
person by any person in relation to management, maintenance or
repair, its aim was specific and clear. Therefore, for the purpose
of Finance Act, 1994 and while bringing in service tax, the
definitions were to guide as to what could be a taxable service as
defined under section 65(105) and when a particular category of
service was contemplated by sub clauses thereof that was
specified. The definitions contained in section 65 and by prior
clauses would act as and provide a guideline. We do not see how it
is possible to accept the argument of Mr. Sridharan based on the
wording of section 65(25b) and section 65(64). As we have
already held above, the definitions are for the purpose of
understanding the taxable service provided or to be provided by a
stock-broker, to a policy holder by an insurer, by an advertising
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agency, by a courier agency etc. and when it came to service in
relation to management, maintenance or repair, the legislature
was free to tax it. Merely because repairs of roads and airports is
specifically excluded from the definition of "commercial or
industrial construction" it could still be brought in under the
category of "management, maintenance or repair service".
Ultimately, management, maintenance or repair is defined to
mean any service provided by any person under a contract or an
agreement for a manufacturer or any person authorised by him in
relation to management of properties, whether immovable or not,
maintenance or repair of properties, whether immovable or not
or maintenance or repair including reconditioning on restoration,
or servicing of any goods, excluding a motor vehicle. Mr.
Sridharan does not urge that roads and airports are not
properties. It is the management of properties as also their
maintenance or repairs, irrespective of whether they are
immovable or not, which is a management, maintenance or repair
service. Once it is taxable, then, whether it is in relation to road
or airport is hardly relevant and material for us. It is not for us to
sit in judgment over the wisdom of the legislature. We are not
concerned with that in this matter. In matters of taxing
provisions, the legislature enjoys a very wide latitude and
discretion. It need not tax everything to tax something. It is not
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for the court to probe this part of the legislative action even if it
finds that some other way or measure could have been thought of.
Mr. Sridharan was unable to point out any legal prohibition
either. In such circumstances, we do not think that the
submission has any merit. The whole argument proceeds on the
logic of the legislature in excluding from one definition the aspect
of maintenance or repair and including it in some other definition.
In that regard, we find that commercial or industrial construction
service is defined in section 65(25b) and in its wisdom, the
legislature thought the services provided in respect of roads,
airports, railways, transport terminals, bridges, tunnels and dam
would not be necessarily commercial or industrial construction
and in any event repair, alteration, renovation, restoration of
such utility should be excluded from the purview of the definition
of the term "commercial or Industrial construction service". By
this, there is no prohibition for bringing it in another category.
We do not think that the definitions as carved out would make
any provision of the Act redundant. Once management,
maintenance or repair is a service and, in it, provision of such
service in relation to any property immovable or otherwise could
be brought, then, we do not think that we should uphold the
argument of Mr. Sridharan. It is clear that in matter of taxation,
when the language of the section or provision is clear and
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unambiguous, then, the court must give effect to it. There is no
question of then interpreting the provision and by finding out the
supposed intention of the legislature. It is only when the
language is not clear but ambiguous or obscure, then, there is
scope for interpretation. In the present case, we do not think that
the principles of interpretation can be pressed into service. More
so when we do not find any redundancy or absurdity. Eventually,
in inserting and incorporating definitions so as to understand
taxable service if management, maintenance or repair is taken to
be a distinct service and that aspect is excluded from the
definition of the term "commercial or industrial construction
service", then, it is not a case of redundancy or rendering any
provision nugatory, but being specific and clear. Once the matter
is understood in this manner, then, the submission of Mr.
Sridharan, based on the judgment of the Hon'ble Supreme Court
of India in the case of Tahsildar Singh (supra) cannot be accepted.
71. In the case of Tahsildar Singh (supra), the Hon'ble Supreme
Court of India was concerned with construction of section 162 of
the Code of Criminal Procedure, 1898. The argument before the
Hon'ble Supreme Court was that section 162 of Cr. P. C. by its own
operation attracts the provisions of section 145 of the Indian
Evidence Act and under the later section, the whole vista of cross-
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examination on the basis of the previous statement in writing
made by the witness before the police is open to the accused and a
question can be posed to him with a view to elicit response and
equally by contradicting him by putting to him an earlier
statement which does not contain the statement made during the
course of trial. The second argument was that the word
'contradiction' is of such wide connotation that it takes in all
material omissions and the court can decide whether one such
omission has to amount to contradiction only after the question is
put, answered and relevant portion or part of it is marked and
therefore, no attempt should be made to evolve an arguable
principle but the question must be decided at large by the Judge
concerned on facts of each case.
72. It is in that context, the Hon'ble Supreme Court, after
reproducing both, section 162 of the Cr. P. C. and section 145 of
the Indian Evidence Act held that the object of the legislature
throughout has been to include the statement of the witnesses
made before police during the investigation for being used at the
trial for any purpose and the amendments from time to time were
only intended to make clear the object and to dispel cloud cast on
such intention. It is in that regard the Hon'ble Supreme Court of
India made the observations relied upon by Mr. Sridharan.
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Therefore, the Hon'ble Supreme Court of India held in para 14
that unless the words are clear, the court should not so construe
the proviso as to attribute the intention of legislature to give with
one hand and take away with another. A sincere attempt should
be made to reconcile the enacting clause and the proviso and to
avoid repugnancy between the two. But, if the words are clear,
plain and unambiguous, then, we do not think how this principle
can have any application.
73.
Then, Mr. Sridharan places reliance on the judgment of the
Gujarat High Court in the case of Darshan Hosiery Works vs.
Union of India3. Reliance by Mr. Sridharan on this judgment also
is totally misplaced. The contentions in the petition before the
Hon'ble Gujarat High Court centered around the interpretation of
Item 22D and Item 68 in the first Schedule of the Central Excise
Act, 1944. After reproducing these articles, the Division Bench
held that the goods which are specifically referred to in Item 22
having been exempted from tax, they cannot be brought to tax by
relying on the residual entry. It is in that context that the
Hon'ble Supreme Court relied upon the principle that when there
is a law generally dealing with a subject and another dealing with
one of the topics comprised therein, then, general law is to be
3 1980 (6) ELT 390
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construed as yielding to the special in respect of matters
comprised therein. We do not think this principle in para 8 would
be said to be attracted and can be applied to the facts of the
present case. Here, we have two definitions which are to be found
to understand the whole gamut of services brought to tax. To
encompass almost all the services for bringing them in the tax
net, their definitions are worded accordingly. We cannot ignore
the plain words by applying the above principle.
74.
Then, Mr. Sridharan has placed reliance upon the judgment
of the High Court of Punjab and Haryana affirming the view of the
Tribunal in the case of Dr. Lal Path Lab Pvt. Ltd. vs.
Commissioner of Central Excise, Ludhiana 4. That case dealt with
a pathological laboratory. A sample collection centre was
managed for specialized laboratories. The sample collection
centre collected the samples, processed them to the extent
required and forwarded them to the test laboratory. The test
laboratory and the sample collection centre had a principal agent
relationship. After referring to the basic terms and conditions of
this agreement, the tribunal proceeded to consider the argument
revolving around the dispute as to whether the service rendered
by the collection centre is "business auxiliary service" or
4 2007 (8) STR 337 (P&H)
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"technical test and analysis service". The two definitions have
been reproduced in para 4 of the tribunal's order. The argument
of the parties and particularly the principal and the collection
centre was noted. Thereafter, the argument of the departmental
representative also came to be considered. The tribunal held that
services rendered by the appellant before it of drawing,
processing and forwarding of samples is integral to the testing of
those samples. One of the orders impugned before the tribunal
also noted that drawing of test sample may form part of test
analysis. Therefore, the tribunal held that once they are held to
be so integral, then, in the factual situation and the broad scope of
the definition brings these services rendered by collection centre
within the scope of "technical testing and analysis". Once there is
a specific entry for an item in the tax code, the same cannot be
taken out and goods cannot be taxed under any other entry if
they are covered by such specific entry. The Revenue, in that
case, was seeking to discard the specific entry and to bring the
services of the appellant before the tribunal under very general
entry only because under the specific entry, no tax was payable.
It is this approach which was held to be contrary to the scheme of
the legislation. It is in that context that the principle relied upon
by Mr. Sridharan has been pressed into service. It is this
principle which was relied upon by the Hon'ble High Court of
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Punjab and Haryana to dismiss the appeal of the Revenue. Once
again, application of this principle must be seen in the backdrop
of the peculiar facts and circumstances.
75. The other decision relied upon by Mr. Sridharan is in the
case of Commissioner of Customs and central Excise vs. Federal
Bank Limited5. The High Court of Kerala was considering the
question as to whether the tribunal was right in holding that the
collection of telephone bills by Federal Bank for Bharat Sanchar
Nigam Limited, Airtel and other companies is not business
auxiliary service attributing liability of service tax falling under
section 65(19) of the Finance Act, 1994. The tribunal referred to
the facts, the services rendered and concluded that the definition
refers to each and every service covered by sub clause (i) and sub
clause (vi), which do not specifically cover banking and other
financial services. Banking and other financial services are
specifically covered by clause (12) of section 65. Federal Bank is
rendering banking/financial services. There is no scope for
charging tax for this service rendered by bank under any other
head. The High Court held that clause (12) of section 65 covers
all charging services rendered by bank. It is in these
circumstances but for different reasons the tribunal's view was
5 2013 (29) STR 554 (Ker.)
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upheld. This judgment also has no application to the facts of the
present case.
76. Mr. Sridharan has relied upon some more decisions in the
written submissions and on the same principle. We do not think
that we should burden this judgment with reference to every such
decision relied upon for what we are concerned with is not a
situation as indicated above on par with the facts and
circumstances in the reported decisions. For the above reasons,
we also distinguish the judgments relied upon, namely, Kerala
State Industrial Enterprises Ltd. vs. Commissioner of Central
Excise, Customs and Service Tax6 and Meteor Satellite Limited
vs. Income Tax Officer, Companies circle-IX, Ahmedabad7.
77. Then, Mr. Sridharan assailed the reasons which are
assigned by CESTAT while interpreting section 97 of the Finance
Act, 1994. We do not think that Mr. Sridharan's arguments on
this point are well founded. This is not a case of the legislature
granting exemption from tax as and by way of abundant caution.
The legislature has clearly held that the service falling within the
6 2011(28) STR 574 (Ker.)
7 (1980) 121 ITR 311 (Gujarat)
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purview of section 97 can be brought to tax. It is, therefore, clear
that exemption of those services from tax has been granted by
exercising a distinct power vesting in the Central Government. It
is that distinct power which has been conferred and envisaged in
the Central Government by the enactment. Once we do not think
that the principle and the maxim relied upon has any application,
for that reason, we need not refer to the Principles of Statutory
Interpretation by Justice G. P. Singh, Seventh Edition page 66.
78.
The principle of presence of an exemption notification and
that covering a composite contract by itself is not indicative that
the services or contracts referred therein were taxable, also
cannot be relied upon. The levy of service tax was itself found to
be nonexistent. Therefore, question of exemption would not arise.
In other words, what could be brought to tax alone can be
exempted from it or the levy. If that was not taxable at all or
from inception, then, there is no question of grant of any
exemption therefrom. That is a principle which has been laid
down in case of Commissioner of Income Tax vs. Shaw Wallace
and Co.8
8 AIR 1932 SC 138.
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79. The second submission of Mr. Sridharan is that the term
"road" is a genus of which runways is the species. Hence, repair
services rendered qua runways will also be exempted in terms of
section 97 of the Finance Act, 1994.
80. We do not think that this contention also is well founded.
We have already noted that there is a difference even in
commercial parlance between these two words and terms. These
terms being not defined in the Finance Act, 1994, it is conceded
that they must take their colour from their common parlance
meaning. They must be understood and interpreted as known to
the commercial world. Even the plain dictionary meaning does
not support the above contention. Concise Oxford Dictionary,
1990 Edition says that "runway" is a specially prepared surface
along which a aircraft takes off and land. Thus, it is a path for
aircraft to take off from. Whereas, "road" may be a path or way
with a specially prepared surface, but it is used by
vehicles/pedestrians etc. Mr.Sridharan may have relied upon the
meaning of these two words in the Chambers Dictionary, 1993
Edition page 1487, but even those definitions would make it clear
that ordinarily road is understood as a passageway, track suitable
for wheeled vehicles. That is not how runway is construed and
understood. Runway is made or specifically prepared along
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which a aircraft takes off and lands. Eventually, it is not how it is
made and surfaced, but what it is utilized for which is relevant.
We do not think, therefore, that the premise or foundation that
road is a genus of which runway is species is correct and proper.
Mr. Sridharan submits that road is a wide term and included in it
is a runway. Hence, it is no different from a road. We are unable
to agree.
81. The reliance placed by Mr. Sridharan on a Division Bench
judgment of this court in the case of Union of India vs. Authority
under the Minimum Wages Act 9 is entirely misplaced. There, the
argument on behalf of Union of India was that the orders passed
by the authorities under the Minimum Wages Act, 1948 should be
quashed and set aside. The facts have been noted in para 2 of this
judgment. The competent authority under the Minimum Wages
Act held that the word "road" included a rail road within the
meaning of Entry No. 7 in part I of the Schedule to the Minimum
Wages Act, 1948 and therefore, he had jurisdiction to entertain
and try the application. He directed that the application should
proceed on merits.
82. The argument was that respondent no. 2 to 201 before this
court were in employment on the construction or maintenance of
9 AIR 1969 Bom. 310
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roads. Construction or maintenance of a railway track is not
covered by expression "construction or maintenance of roads".
Therefore, the Division Bench was required to construe as to
whether the term or word "road" would include maintenance of
railway track. One must not forget that the Division Bench was
construing and interpreting a legislation like the Minimum Wages
Act, 1948. After analyzing the provisions of this Act, in para 4,
the Bench proceeded to consider the primary contention. If the
road can be defined to mean as line of communication between
places for use of foot passengers, riders and vehicles and the
expression "road-bed" is described to mean "foundation, structure
of a railway", then, there is no reason why the railway should not
mean a road or a line of communication between places for use of
vehicles. Once a railway engine or wagon or compartment would
undoubtedly fall within the meaning of the word "vehicle" as
carriage conveyance of any kind used on land, then, in the
opinion of the Division Bench, the maintenance of railway
contract would fall within the broad category. That is how it
carved out the principle that road is genus and railway is species
of road. We cannot forget that in construing a welfare and
beneficial piece of legislation and ensuring that its benefits are
derived by those for whom it is enacted that such a broad
categorization has been made. We are not concerned with such a
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piece of legislation. We are interpreting a taxing provision. In
that, there is no scope for intendment or some assumption or
hidden meaning. It is the plain language and if it is clear and does
not lead to any absurdity, it has to be construed and interpreted
as it stands. There is no scope then for interpretation. Para 8 of
the decision of the Division Bench would clinch the issue, which
reads as under:-
8. It is an ordinary rule of interpretation of statutes that
the words of a statute when there is a doubt about their
meaning are to be understood in the sense in which they
best harmonise with the subject of the enactment and the
object which the legislature has in view. When dealing
with particular business or transactions words are,
therefore, presumed to be used with the particular
meaning in which they are understood in the particular
business in question. If there is no special meaning given
to a word in that business, the words are used in the
popular dictionary sense. The Minimum Wages Act is part
of labour legislation. In absence of any special meaning
given to it in any labour legislation which is in pari
material with this Act or by a judicial precedent, the literal
meaning is to be preferred to any special meaning that the
word any special meaning that the word may bear in any
other enactment which has a different subject of
enactment and has a different object to be achieved in
view. It would, therefore, appear that the construction or
maintenance of roads would include "construction and
maintenance" of railway, rail-road or railway tracks."
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83. Hence, we are not in agreement with Mr. Sridharan that
section 97 should be interpreted as suggested by him. We do not
think that for the above reasons any assistance can be derived by
the judgment of the Hon'ble Surpeme Court of India in the case of
Commissioner of Central Excise and Customs, Kerala vs. M/s.
Larsen and Toubrao Ltd.10 decided on 20th August, 2015. There,
the issue was whether service tax can be levied on individual
works contracts prior to the introduction on 1st June, 2007. The
Hon'ble Supreme Court concluded that a works contract is a
separate species of contract distinct from contracts for services
simpliciter recognized by the world of commerce and law as such
and have to be taxed separately. It is in the context of such
essential controversy that all observations and conclusions
rendered from paras 24 to 29, relied upon by Mr. Sridharan must
be seen. Even para 43, relied upon by Mr. Sridharan of this
judgment cannot be read out of context and in isolation. If there
is no charge or machinery to levy and recover tax on individual
or composite works contract, then, none of the arguments of the
Revenue noted by the Hon'ble Supreme Court could have been
accepted.
84. Mr. Sridharan relied upon some English judgments, but
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those carry forward the interpretation placed on the word "rail
road" and as a part and parcel of broad category of "road". If we
have distinguished the judgment of the Division Bench of this
court, for selfsame reasons, even these judgments are
distinguishable. Merely because on some portions and adjacent to
a runway, motor vehicles ply or to tow or bring back stranded
aircraft specialized recovery vehicles are brought on runway
does not mean that runways are roads. We do not think that
section 97 can be construed in this manner.
85. Then, the third submission is pertaining to section 98 of the
Finance Act, 1994. That grants retrospective exemption to
repair/maintenance services provided to non commercial
Government buildings. The argument is that the same must be
extended to repair of airports as well. It is submitted that
management, maintenance or repair of non commercial
Government building would mean an airport should be covered
therein. Airports do not carry out any commercial activity. In
any case, larger part of demands pertain to defence airports
which are exclusively used for defence operations. Those airports
falls under the scope of non commercial Government buildings.
"Airport", as defined in the Airports Authority of India Act, 1994
includes the runways and therefore, it would be absurd to suggest
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that maintenance or repairs done to roads which are part of the
building or airport will not fall within this provision. We do not
think that such contentions and far fetched as they are can be
accepted. Mr. Sridharan forgets that we are not construing as to
whether airport is covered by section 98 of the Finance Act,
1994. We are concerned here with appellant's specific case.
Some of the services provided included extension, strengthening
of runways, taxi ways, apron taxi ways. We are concerned with
these services. Whether these services are falling in the category
of maintenance and repairs of road is the question before us. We
do not think that we are required to find out whether definition of
"airport" itself includes runways and even if they are so included,
whether those are contemplated by section 98. Section 98 refers
to building services relating to management etc. of non
commercial Government buildings. We are not construing the
ambit and scope of such services. We are concerned with the
excision from the definition of this service the maintenance of
road, repair to runway etc. That exclusion is clear.
86. Hence, we restrict the arguments made as above.
87. Even the fourth submission and based on the judgment in
the case of Commissioner of Central Excise and Customs, Kerala
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vs. Larsen and Toubro (supra) cannot be accepted for the reason
it is distinguishable on facts.
88. We do not think that the fifth, sixth and seventh
submissions, as appearing in that order in the written
submissions need detain us. These are based on findings of fact.
Once they are relatable to the main contentions and in any event
the tax demand as far as site formation and excavation services
is concerned has been upheld by observing and holding that it
was not exempted under Notification No. 17/2005-ST bearing in
mind the site or place where the services are rendered but its
location. That being at a far of place, on facts, the benefit of this
notification was denied. We do not think that the tribunal was in
error in upholding the demand.
89. Even on the point of limitation and no penalties are
imposable, we are of the view that there was never any doubt
about the provisions and the nature of the services. We do not
think, therefore, that appellant can assail or challenge the
findings on the point of limitation and imposition of penalty.
90. As a result of the above discussion, we do not find any merit
in the appeal. Once the order impugned in the writ petition is a
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consequential one and follows the tribunal's order under appeal
and is delivered and pronounced on remand, then, for the very
reasons, which we have assigned for upholding the conclusion of
the tribunal would cover the outcome of the writ petition. If the
tribunal's order dated 29th May, 2013 is upheld, then, this order
also must prevail. Consequently, the writ petition must also fail.
Rule is discharged. There would be no order as to costs.
(G. S. KULKARNI, J.)
ig (S.C.DHARMADHIKARI, J.)
J.V.Salunke,PA
