CESTAT Rules No Service Tax Applicable on Road Repair and Maintenance Services from June 16, 2005, to July 26, 2009

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Published on: February 20, 2024 at 16:41 IST

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has declared that service tax for the period from June 16, 2005, to July 26, 2009, is not applicable to maintenance and repair services concerning the repair and maintenance of roads.

The tribunal, consisting of D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member), based its ruling on judgments from the Allahabad High Court (Delta Erectors Pvt. Ltd. vs. UOI) and the Madhya Pradesh High Court (M. P. Audhyogik Kendra Vikas Nigam vs. Chief Commissioner). Both cases concluded that service tax for the period 2005-2006 to September 30, 2008, is not leviable under maintenance and repair services for roads.

During the mentioned period, the appellant provided management, maintenance, or repair services for state and national highways.

The tax department contended that service tax was applicable under the category of management, maintenance, or repair service, leading to a show-cause notice for recovering Rs. 1,87,03,880 along with interest and penalty. The demand was confirmed after adjudication.

The key question addressed was whether service tax applied to maintenance or repair services related to roads, specifically state and national highways, during the period from 2005-2006 to September 30, 2008.

The appellant argued that the issue falls under the retrospective amendment introduced in 2012 through Section 143 of the Finance Act, 2012. This amendment inserted Section 97 into the Finance Act, 1994, which stipulates that no service tax shall be levied or collected for the management, maintenance, or repair of roads from June 16, 2005, to July 26, 2009.

In light of this provision, the tribunal overturned the service tax demand, thereby allowing the appellant’s appeal.

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

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