Case Note & Summary
The petitioners, JSW Dharmatar Port Pvt. Ltd. and JSW Jaigarh Port Ltd., are companies engaged in developing and operating ports. In the course of their business, they availed construction services from Paresh Constructions and Foundation Pvt. Ltd. for developing the port. These services were claimed to be exempt from service tax under Notification No.25/2012-ST dated 20.06.2012, Entry No.14, which exempts services by way of construction, erection, commissioning or installation of original works pertaining to an airport, port or railways. The respondents, Union of India and the Assistant Commissioner, CGST & CX, issued show cause notices proposing to levy service tax on the construction services, arguing that the exemption was not available because the service provider had not claimed the exemption and the petitioner had not directly contracted with the service provider. The petitioners challenged these notices by way of writ petitions. The court examined the exemption notification and found that the services clearly fell within the scope of Entry No.14. The court held that the exemption is available regardless of whether the service provider claimed it or whether the recipient had a direct contract with the provider, as long as the services are for construction of original works pertaining to a port. The court allowed the writ petitions, quashing the show cause notices and directing the respondents to refund any amounts collected.
Headnote
A) Service Tax - Exemption Notification - Construction of Port Services - Notification No.25/2012-ST dated 20.06.2012, Entry No.14 - The petitioner, a port developer, availed construction services for port development. The department sought to levy service tax on such services. The court held that the services fall within the exemption entry for construction of original works pertaining to a port, and the exemption cannot be denied merely because the service provider did not claim exemption or the recipient did not have a contract with the service provider. (Paras 1-13)
Issue of Consideration
Whether services by way of construction of original works pertaining to a port are exempt from service tax under Notification No.25/2012-ST dated 20.06.2012, Entry No.14?
Final Decision
The court allowed the writ petitions, quashing the show cause notices and directing the respondents to refund any amounts collected.
Law Points
- Exemption notification must be interpreted strictly
- but beneficial construction applies to taxing statutes
- Services by way of construction of original works pertaining to a port are exempt from service tax
- Notification No.25/2012-ST dated 20.06.2012 Entry No.14 covers construction of port services
