No Service Tax Applicable On Providing Repair, Management And Maintenance Of Roads Services To NHAI: CESTAT

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is applicable to the repair, management, and maintenance of road services for the National Highway Authority of India (NHAI).

The bench of Anil Choudhary (Judicial Member) and A.K. Jyotishi (Technical Member) has observed that the assessee has provided repair, management, and maintenance of roads services for NHAI and others, which fall under the category of maintenance or repair services.

The issue raised was whether the appellant or assessee is liable to pay service tax on the activities of management, maintenance, and repairs to roads.

The show cause notice was issued, invoking an extended period of limitation and proposing to demand service tax. It appeared to the department that the appellant or assessee has been providing maintenance or repair services with respect to roads.

The department noted that the maintenance and repair of roads were brought under the tax net w.e.f. June 16, 2005, and May 1, 2006. The appellant had taken registration w.e.f. March 18, 2008, and was paying service tax.

The Show Cause Notice proposed to demand Rs. 7.14 crores with a proposal to appropriate an amount of Rs. 1,79,56,048/- already deposited prior to the issue of the SCN, along with interest. The penalty was also proposed.

The Appellant contended that during the pendency of the Appeal, the Central Government had inserted Section 97(1) in the Finance Act, of 1994. It provides that notwithstanding anything contained in Section 66, no service tax shall be levied or collected in respect of management, maintenance, or repair of roads during the period on and from the 16th day of June 2005, to the 26th day of July 2009 (both days inclusive). Sub-Section (2) provides for refunds of all service tax that has been collected but could not have been collected in view of the retrospective effect of Section 97(1) of the Finance Act.

The CESTAT held that by virtue of the insertion of Section 97(1) by the Finance Act, 2012, with retrospective effect from June 16, 2005, and applicable till July 26, 2009, no service tax is leviable on the activity of repairs, management, and maintenance of roads.

Case Title: B. Ramanaiah Constructions Versus Commissioner of Central Excise

Case No.: Service Tax Appeal No. 469 of 2012

Date: 01.08.2023

Counsel For Appellant: Y. Sreenivasa Reddy

Counsel For Respondent: M. Anukathir Surya

Click Here To Read The Order