Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  GST registration cancellation without reasons amounts to ‘Economic Death’ of business: Supreme Court. *  No GST refund if appeal before GSTAT is filed late: Gujarat High Court. *  Mere upload of GST notice on portal not valid service, appeal limitation won’t start: Punjab & Haryana High Court. *  Taxpayer can’t be penalised for missing notices hidden under ‘Additional Notices/Orders’: Calcutta High Court allows fresh adjudication. *  State tax officer can’t issue GST SCN beyond CBIC-assigned jurisdiction: Bombay High Court stays recovery proceedings. *  Earlier 7.5% Pre-Deposit must count towards mandatory 10% for Appeal: Uttarakhand high court quashes CESTAT Order. *  Third Parties can’t challenge GST Advance Rulings merely due to financial impact: Karnataka HC *  GST SCN generated using AI tool quashed: Punjab & Haryana High Court *  Bank Attachment Quashed as Madras HC Quashes GST Order Issued Against Deceased Person *  ITC Blocking Order for Failure to Record ‘Reason to Believe’ U/R 86A Quashed: Allahabad High Court *  Govt Extends GSTAT Appeal Filing Deadline From 30 June to July 31, 2026 *  GST Demand on RWA Stayed: Allahabad High Court Questions Taxability of Electricity Distribution to Flat Owners *  CBIC Clarifies Jurisdiction After GST Registration Transfer: Earlier Proceedings Remain Valid, New Officer to Continue Action *  GST authorities’ certification not mandatory for reimbursement, but tax payment must be proven: Karnataka HC *  Contractor can’t seek gst reimbursement through writ when contract has arbitration clause: Karnataka HC *  Unsigned Order Is No Order in Law: AP HC Quashes GST Assessment Order for Want of Officer’s Signature *  Customs Can’t Levy Rs. 1.36 Crore Cost Recovery Charges Without Proof of Full-Day Officer Deployment: CESTAT  *  12% IGST Payable On Imported Dialysis Machine Parts: CESTAT *  Bombay High Court Admits Challenge to GST Limitation Extension Notifications; Grants Protection Against Coercive Recovery *  Criminal Case Can’t Run Parallel to GST Proceedings on Same Facts: Allahabad High Court *  Allahabad High Court Stays GST Detention Order; Directs Release of Vehicle and Goods on Deposit of Rs. 1.44 Lakh *  Service Tax Can’t Be Levied on Loss-Making Contracts: Gujarat High Court *  GSTN Mandates Ship-to GSTIN in e-Invoice and e-Way Bill APIs; Introduces Voluntary e-Way Bill Closure Facility from August 1, 2026 *  GST Appeal Can’t Be Rejected as Time-Barred When Taxpayer Was Pursuing Rectification Remedy: Telangana High Court *  Absence of E-Way Bill and Transport Documents Justifies Customs Seizure U/s 110: Gauhati HC *  Madras High Court Upholds GST Late Fee and Penalty for Non-Filing of Annual Return, Dismisses Challenge  *  GST Records, Purchase Documents Sufficient to Discharge Burden Under Customs Act: CESTAT Orders Release of 3.65 Kg Gold  *  No Sugar Cess Payable on Sugar Exported Out of India: CESTAT *  Road Construction Services Exempt and SCN Time-Barred: CESTAT Quashes Service Tax Demand Based Solely on Form 26AS  *  ITC Freeze Upheld After GST Dept Find Suppliers Were Allegedly Fake Bill-Trading Entities: Madras HC 
Subject News *  Input service benefits can’t be denied: CESTAT allows export refund despite MMTC acting as Canalising agency. *  No service tax demand without proof of service of SCN: CESTAT. *  Service tax demand quashed as dept. fails to prove service of SCN: CESTAT *  GST : Mere allegation of inadequate consideration of reply not enough to invoke writ jurisdiction: Delhi High Court *  Onerous conditions imposed for provisional release of seized imported goods shouldn’t amount to virtual denial of relief: CESTAT. *  GST SCN without alleging fraud cannot invoke sec. 74: Karnataka High Court quashes adjudication order. *  Extended Limitation Can’t Be Invoked Merely on Form 26AS Data: CESTAT *  Revenue-Sharing with Restaurants Not Taxable as Business Support Service: CESTAT *  R. 6(3) Option Can’t Be Forced on Taxpayer; CESTAT Quashes Rs. 12.36 Crore CENVAT Credit Demand *  Excise Duty | Power Consumption Alone Can’t Prove Clandestine Manufacture: Karnataka High Court *  Madras High Court Examines DGGI’s Authority to Issue GST Penalty Orders Under Section 122, Adds DGGI as Party *  Proceedings under omitted r. 96(10) can’t survive without saving clause: andhra pradesh high court quashes gst refund recovery *  Excise duty power consumption alone can’t prove clandestine manufacture: karnataka high court *  Madras high court rules GST show cause notices must disclose grounds for invoking extended limitation *  Court Can’t Direct Extension GST Return Deadlines or Waive Interest and Penalties: Karnataka High Court *  GST Notifications Can’t Go Beyond GST Council Recommendations: Madras High Court Quashes SCN on Branded Pulses *  Appeal Can’t Be Dismissed for Delay When Dept’s Own Order Mis-states Limitation Period: CESTAT *  No Evidence of KYC or Due Diligence Breach By Customs Broker: CESTAT Quashes Licence Revocation in Export Overvaluation Case *  Glucometers Are Chemical Analysis Instruments Classifiable Under Tariff Heading 9027: CESTAT *  Validity of Post-GST Service Tax Proceedings Upheld: Gujarat High Court Dismisses Challenge to S. 73 SCN *  Rectified GST Refund Applications Can’t Be Rejected as Time-Barred If Original Refund Claim Was Filed Within Limitation: Gujarat HC *  Service Tax Refund Can’t Be Denied as Time-Barred When Levy Itself Is Unconstitutional: Gujarat High Court *  Same Officer Can’t Act As Auditor & Adjudicator: Karnataka High Court *  Karnataka High Court Condones 324-Day Delay, Revives Customs Appeal in Jewellery Pilferage Case  *  Madras High Court Quashes GST Assessment Order Passed Ex Parte Despite Prior ITC Reversal; Lifts Bank Attachment *  Tobacco Process Doesn’t Amount to Manufacturing: Madras High Court Quashes Rs. 1.32 Crore Compensation Cess Demand  *  Recovery Notice Unsustainable After Voluntary Reversal of Unutilised Credit: CESTAT  *  GST | ‘System Generated’ SCN Without Officer Details Invalid: Allahabad HC  *  Electronic Records Without Statutory Certification Requirements Can’t Justify Undervaluation Allegations: CESTAT *  Madras High Court Stays GST Order, Finds Prima Facie Merit in Plea Against S. 74 Proceedings Based on S. 73 Intimation  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2729

Whether work of joining railway sections taxable under service tax?

Case:-HARSHAD THERMIC INDUSTRIES (P) LTD. VERSUSCOMMR. OF C. EX. & CUS., RAIPUR

Citation:- 2015 (37) S.T.R. 808 (Tri. - Del.)

Brief facts:- The facts which led to filing of this appeal are, in brief, as under:-
The appellant were engaged in the business of manufacture of thermite mixture and rendering service in relation to thermite welding of rail joints. The thermite mixture, which was used for thermite welding, consists of iron oxide (ferric oxide) and metal powder like aluminum powder, magnesium powder zinc powder etc. In thermite welding process using the mixture of iron oxide and aluminum powder as fuel, the aluminum reduced the iron oxide and iron is produced with a large amount of heat, as the reaction was exothermic. The melted iron produced filled the gap between the rails to be joined. The appellant undertake the joining of two pieces of rails at site for Railways by thermite welding. The department was of the view that the process undertaken by the appellant is “production or processing of goods not amounting to manufacture” and hence, Business Auxiliary Service attracting Service Tax under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. It was on this basis that a Service Tax demand of Rs. 50,32,293/- was raised against the appellant along with interest and also for imposition of penalty vide show cause notice, dated 23-10-2007 for the period 16-6-2005 to 28-2-2007. The show cause notice was adjudicated by the Commissioner vide order-in-original, dated 14-2-2008 by which the Commissioner confirmed the above demand to the extent of Rs. 26,09,242/- and dropped the remaining demand of Rs. 24,29,051/- on the ground that this Service Tax has been demanded on the cost of materials sold. Besides this he also demanded interest on the Service Tax demand confirmed and also imposed penalty of equal amount on the appellant under Section 78 of Finance Act, 1994. Against this order of the Commissioner, this appeal was filed.

Appellant’s contention:- Shri B.L. Narsimhan, Advocate, ld. Counsel for the appellant explained in detail the process of thermite welding undertaken by the appellant for joining of rails and pleaded that since the rails have been joined at site, no goods have emerged for delivery to Railways and that in view of this, the process undertaken by the appellant cannot be categorized as production or processing of goods not amounting to manufacture so as to attract Service Tax demand under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. He, therefore, pleaded that the impugned order was not correct.

Respondent’s contention:- Shri A. Jain, ld. DR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that as a result of the process undertaken by the appellant, the pieces of rails with longer length emerge and hence, the process undertaken by the appellant was production of goods not amounting to manufacture and would attract Service Tax under Section 65(105)(zzb) read with Section 65(19) ibid.
 
Reasoning of judgment:- Undisputedly, the appellant undertook the joining of sections of rails at site by thermite welding process. The welding of section of rails which are of length of 100 Mtrs was done at site as a result of which there were lesser number of gaps at every 2 Km instead of at every 100 Mtrs, resulting in smooth movement of train on the railway tracks. In fact, the process undertaken by the appellant was part of the process of laying down of tracks and make them fit for traffic movement, as before undertaking the thermite welding process, the rails had to be precisely aligned. In their view, therefore, the activity of the appellant did not result in any deliverable goods to the railways and it cannot be said to be the production or processing of goods not amounting to manufacture. The impugned order, therefore, was not sustainable. The same is set aside. The appeal was allowed.

Decision:- Appeal allowed.

Comment:- In this case, the assessee undertook the work of joining railway sections which resulted into smooth moment of railway, which was the part of the process of laying down the railway tracks. The crux of this case is that although the activity undertaken by the assessee did not result into any deliverable goods to the railway but it cannot be said that there was no production of goods. Hence, it was production or processing of goods amounting to manufacture and was not chargeable to service tax.

Prepared by:- Prayushi Jain

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com