ST - Repair of roads - Retrospective exemption - Prima facie, runways at airports are species of genus 'road' and, therefore, runways should also normally receive same treatment as roads for ST purpose - CESTAT directed to hear appeal finally within 3 months: Bombay HC
By TIOL News Service
MUMBAI, DEC 20, 2012: THE appellant is registered as Service Tax Provider and carries on the business of maintenance and repairs of roads including runways at different airports.
A show-cause notice was issued to the appellant seeking to tax the appellant's service of maintaining and repairing roads and runways under the head ‘Management, Maintenance or the repairs of properties whether immovable or not' under Section 65(64) of the Act. The Service Tax demanded was Rs.10.25 crores for the period 2005-06 to 2009-10.
The CCE & Customs, Nagpur confirmed the demand and imposed penalties.
In appeal before the CESTAT, the appellant pointed out that no service tax is payable in respect of repairs of roads as the same were exempted with retrospective effect from 16/6/2005 to 26/7/2009 by virtue of Section 97 of the Finance Act, 2012. It was also submitted that vide notification 24/2009-ST, dated 27/7/2009 the Central Government had exempted service tax leviable in relation to maintenance and repairs of roads.
The CESTAT vide order dated 30/7/2012 while partly dispensing with pre-deposit held that repairs and maintenance of roads are exempted from service tax and, therefore, demand made by the revenue to that extent is not tenable. However, the Tribunal took a view that the repairs and maintenance of runways at airports are chargeable to service tax.
Inasmuch as the Bench directed the appellant to deposit an amount of Rs.3 crores being the demand attributable to the service of repairing of runways for the purpose of hearing the appellant's appeal on merits.
Against this order of the CESTAT, the appellant is before the Bombay High Court.
The High Court after hearing both sides observed -
"6. ...We find that the issue for consideration before the Tribunal on merits would be whether the word “roads” would include within it “runways” at airports. Prima facie, it appears to us that runways at the airports are species of the genus "road". Therefore, the runways should also normally receive the same treatment as roads for service tax purpose. We find prima facie that the case of the appellant is a very arguable case. However, we find that in the order of the Tribunal dated 30/7/2012 there is no consideration of the issue even for the purposes of taking a prima facie view. The consideration bestowed by the Tribunal on the issue whether the term “roads” would include “runways” is as under: -
x x xIn the above circumstances, we would have normally remanded the issue to the Tribunal for fresh consideration. However, we are not doing the same, as the amount involved is over Rs.10 crores, it would be appropriate if the Tribunal hear the appeal itself finally at the earliest.7. In view of the above, we set aside the order of the Tribunal dated 30/7/2012 and direct the Tribunal to hear the appellant's appeal on merits without insisting of any pre-deposit of duty, interest or penalty. However, as the amount involved in the appeal is over Rs.10 crores, we would direct the Tribunal to hear the appellant's appeal on merits itself at the earliest and hopefully within a period of three months from today.
8. We make it clear that the observations made by us in this order are only a prima facie view and the Tribunal should not be influenced by the same while disposing of the appellant's appeal on merits."
The appeal was disposed of accordingly.
(See 2012-TIOL-1030-HC-MUM-ST)
