Service Tax From 16.06.2005 to 26.07.2009 Not Leviable On Services Of Repair And Maintenance Of Roads: CESTAT

The Banglore Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax during the period from 16.06.2005 to 26.07.2009 is not leviable under maintenance and repair service in relation to the repair and maintenance of roads.

The bench of D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member) has relied on the judgments of Allahabad High Court in Delta Erectors Pvt. Ltd. vs. UOI and Madhya Pradesh High Court in the case of M. P. Audhyogik Kendra Vikas Nigam vs. Chief Commissioner, in which it was held that service tax from 2005-2006 to September 30, 2008 is not leviable under maintenance and repair service in relation to repair and maintenance of roads.

During the period 2005–2006 to September 30, 2008, the appellant or assessee provided management, maintenance, or repair services for state and national highway roads.

The department alleged that the service tax was leviable under the taxable category of management, maintenance, or repair service. A show-cause notice was issued to them for the recovery of service tax amounting to Rs. 1,87,03,880 with interest and penalty. On adjudication, the demand was confirmed with interest and a penalty.

The issue raised was whether maintenance or repair services rendered in relation to roads, i.e., state and national highways, were subjected to service tax during the period 2005–2006 to September 30, 2008.

The assessee contended that the issue is covered by the retrospective amendment issued in the year 2012 via Section 143 of the Finance Act, 2012, whereby Section 97 has been inserted into the Finance Act, 1994.

Section 97 of the Finance Act, 1994, relates to the special provision for exemption in certain cases relating to the management, etc., of roads. It states that no service tax shall be levied or collected in respect of the 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.

The tribunal set aside the service tax demand and allowed the appeal of the assessee.

Counsel For Appellant: N. Anand

Counsel For Respondent: Dyamappa Airani

Case Title: Dix Engineering Projects Services Pvt. Ltd. Versus The Commissioner of Central Excise

Case No.: Service Tax Appeal No. 378 of 2010

Click Here To Read The Order