By TIOL News Service

MUMBAI, JAN 11, 2013: THE appellant is Central Railway. They undertook maintenance and repairs of Railway sidings owned by private parties under agreements entered into with such owners. The revenue was of the view that the activities undertaken by the Railways comes under the taxable service of "management, maintenance and repair services" as defined under section 65(105)(zzq) of the Finance Act, 1994 read with section 65(64) ibid with effect from 16/06/2005.

SCNs were issued demanding service tax of Rs.2.51 Crores & Rs. 74.22 lakhs for the period 2005-06 to 2007-08 and for the period 2010-11 respectively and were confirmed by the CCE, Nagpur along with interest and penalties.

So, the Central Railway is before the CESTAT.

It is submitted that Railways are a Government undertaking, being part of the Ministry of Railways and hence, they are not liable to any service tax. Secondly, they have not even recovered the cost of rendering the service and, hence, they are not liable to pay any service tax. It is also submitted that vide amending notification no. 54/2010-ST dated 21/12/2010 exemption is available in respect of management, maintenance or repairs of Railways also and, therefore, for the period 21/12/2010 onwards, they are not liable to pay any service tax. Reliance is also placed on the CESTAT decision in Maharashtra Industrial Development Corporation vs. CCE, Nashik (2012-TIOL-1290-CESTAT-MUM) wherein it is held that MIDC being a public authority, the activities performed by them are not taxable under the Finance Act, 1994 and accordingly, stay has been granted.

The Revenue representative submitted that for the levy of service tax, it is immaterial whether the service provider is a Government undertaking or not and the levy applies equally to both Government undertakings as also non-Government undertakings. Inasmuch as in the absence of any specific exemption notification exempting the activities undertaken in respect of maintenance, management or repairs of Railways sidings, the appellant is liable to pay service tax and accordingly he prayed for putting the appellant to terms.

The Bench observed -

"5.1 Under section 65(64) as per "Management, maintenance or repair" means any service provided by:

(i) Any person under a contract or an agreement; or

(ii) A manufacturer or any person authorised by him, in relation to, -

(a) Management of properties, whether immovable or not;

(b) Maintenance or repair of properties, whether immovable or not; or

(c) Maintenance or repair including reconditioning or restoration or servicing of any goods, excluding a motor vehicle

5.2 As per section 65(105)(zzg) taxable services rendered to any person by any person in relation to management, maintenance or repair is leviable to service tax. Prior to 01.05.2006, the taxable service was defined as any service rendered to a customer by any person in relation to management, maintenance or repair. In the instant case, the appellant has entered into contracts with various private Railway sidings owners for the maintenance and repairs of Railway sidings and, therefore, the activity undertaken by the appellant would come within the purview of management, maintenance or repair service and hence, they are rightly liable to pay service tax. Reliance placed by the appellant on the decision of this Tribunal in the case of Maharashtra industrial Development Corporation cited supra is of no help to the appellant. In that case, the said corporation was collecting a fee fixed by the Government of Maharashtra under the Maharashtra Industrial Development Act, 1961. In other words, what was collected by the said corporation was a statutory fee. It is in the facts of that case this Tribunal granted interim stay on the ground that the activities performed by a public authority under the provisions of law are not taxable as per the clarification given by the CBEC in Circular no. 89/7/2006 dated 18/12/2006. In the case before us, the Railways are not collecting any statutory fee but are collecting service charges for the services rendered and, therefore, the said decision does not appear to be applicable to the facts of the present case. There is also no financial hardship pleaded by the appellant."

Holding that the appellant had not made out a prima facie case for complete waiver of dues adjudged against them, the Bench directed them to make a pre-deposit of 50% of the Service Tax adjudged and report compliance.

(See 2013-TIOL-75-CESTAT-MUM)