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

D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member) on the bench referred to rulings by the Allahabad High Court in the case of Delta Erectors Pvt. Ltd. vs. UOI and the Madhya Pradesh High Court in M. P. Audhyogik Kendra Vikas Nigam vs. Chief Commissioner. These judgments established that the service tax for the period between 2005-2006 to September 30, 2008, is not applicable to maintenance and repair services concerning roads.

Between 2005–2006 and September 30, 2008, the appellant or assessee rendered management, maintenance, or repair services for state and national highway roads.

The department contended that service tax was applicable under the taxable category of management, maintenance, or repair services. Consequently, a show-cause notice was issued to them for the recovery of service tax totaling Rs. 1,87,03,880, along with interest and penalties. Following adjudication, the demand was upheld with interest and a penalty.

The central issue in question was whether maintenance or repair services provided in connection to roads, specifically state and national highways, were subject to service tax between the period of 2005–2006 and September 30, 2008.

The assessee argued that this matter is addressed by the retrospective amendment introduced in 2012 through Section 143 of the Finance Act, 2012. This amendment involved the insertion of Section 97 into the Finance Act, 1994, which the assessee believed provided clarification on the taxability of such services.'

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