2015 (10) TMI 366 - HC - Service Tax

Demand for Service Tax Service of Management, Maintenance or repairs of roads provided is totally exempted - Notification issued by the competent authority and vide amendment to the Finance Act, 2012 indicates the service is exempted from payment of tax Department holds that the service so provided falls within the definition of service provided as given under Section 65(64) of the Finance Act Held That - Imposition of tax is wholly unsustainable and impermissible under law Service mentioned was initially liable to tax as per the definition given in the Act but later the same got exemption via notification issued by Central Government Petition is allowed and the objection raised by the Department are overruled and the impugned assessment order is quashed Decided in favour of the assessee.

Summary

Issues:
Challenge to assessment order for service tax on Management, Maintenance, or repairs of roads.

Analysis:
The petitioner challenged the assessment order dated 13.5.2014 and the demand for service tax by the Commissioner, Custom, Central Excise and Service Tax, Bhopal for the service of Management, Maintenance, or repairs of roads. The petitioner contended that the service rendered by them was exempted from service tax. The petitioner, a State Government Company, was granted a contract for construction and maintenance of roads. The Revenue conducted assessments against the petitioner under the Service Tax provisions, claiming the service falls under Section 65(64) of the Finance Act. The petitioner argued that a notification exempted their service from service tax between 16.06.2005 to 26.07.2009, supported by an amendment to the Finance Act in 2012.

The petitioner claimed that the service of Management, Maintenance, or repairs of roads was exempted from service tax based on the notification issued by the competent authority and the amendment to the Finance Act in 2012. The notification exempted the entire service provided in relation to Management, Maintenance, or repairs of roads from service tax. The respondents raised objections to the maintainability of the writ petition, arguing that statutory remedies through appeals were available. However, the Court noted the exemption granted by the notification and the amendment to the statute.

The Court examined the merit of the matter and found that the service in question was exempted from service tax as claimed by the petitioner. The second notification gave retrospective effect to the exemption, making it clear that the service was totally exempted from payment of duty. The Court held that the imposition of tax was unsustainable and illegal, thus allowing the petition, overruling the objections raised by the respondents, and quashing the assessment order and demand notices.

In conclusion, the Court found that the imposition of tax was illegal and unsustainable, leading to the allowance of the petition and disposal of the case in favor of the petitioner.