2013 (7) TMI 396 - AT - Service Tax

Management, maintenance and repair services appellant contended that notification no. 24/2009-ST dated 27/07/2009 exemption was provided for whole of the service tax leviable thereon under section 66 and section 97 - exemption has been given retrospective effect for the period from 16/06/2005 to 26/07/209 Held that - When the impugned order was passed, the retrospective amendment had not come into force - the matter needs to be remanded back to the adjudicating authority for extending this exemption and re-computation of demand. Benefit of exemption for runways Held that - Benefit of exemption available to maintenance/repair of roads will not be available in respect of such activities carried out in respect of runways - According to International Civil Aviation Organization (ICAO) runway is defined as a rectangular area on a land aerodrome prepared for the taking off of aircraft - as per the definition runway is only a rectangular strip of land for landing or taking off of aircrafts - By no stretch of imagination, the runway can be constructed as a road or as a species of a road - in the case of runways public access is prohibited and it is only meant for landing or taking off of the aircrafts - thus runway cannot be considered as a road. The specific exemption for maintenance or repair of roads by the legislature retrospectively clearly shows that the said activity is a taxable activity and, therefore, in public interest the same has been given exemption. If the activity was not taxable ab initio, there was no need for the legislature to pass a specific legislation for this purpose. This also shows that the reliance placed by the appellant on the various case laws in this regard does not support the contentions raised by the appellant. As regards the claim of the appellant that in respect of runways constructed in defence airports, the benefit of retrospective exemption under section 98 of the Finance Act, 2012 would be available, this aspect needs consideration by the adjudicating authority as this issue had not been raised or considered by the said authority.

Issues Involved:
1. Exemption of service tax on maintenance, management, and repair of roads.
2. Classification of runways as roads for service tax exemption purposes.
3. Applicability of service tax on maintenance and repair of runways.
4. Retrospective exemption for maintenance or repair of non-commercial government buildings.
5. Abatement for materials used in maintenance or repair activities.
6. Time-barred nature of the service tax demand.

Issue-wise Detailed Analysis:

1. Exemption of Service Tax on Maintenance, Management, and Repair of Roads:
The appellant argued that under Notification No. 24/2009-ST dated 27/07/2009, services related to the management, maintenance, or repair of roads were exempt from service tax. This exemption was given retrospective effect from 16/06/2005 to 26/07/2009 by Section 97 of the Finance Act, 2012. The Tribunal agreed that the appellant is eligible for this exemption for the specified period, as the retrospective amendment was not in force at the time of the initial adjudication. Consequently, the matter was remanded to the adjudicating authority to re-compute the service tax demand considering this exemption.

2. Classification of Runways as Roads for Service Tax Exemption Purposes:
The appellant contended that runways should be considered as a species of roads, citing various judicial definitions and standards. However, the Tribunal held that roads and runways serve different purposes and are not the same. Roads are paths for transportation accessible to the public, whereas runways are specially prepared surfaces for aircraft takeoff and landing, with public access prohibited. Therefore, the Tribunal concluded that the exemption available for roads does not extend to runways.

3. Applicability of Service Tax on Maintenance and Repair of Runways:
The Tribunal examined whether maintenance and repair of runways could be classified under 'Commercial or Industrial Construction Service,' which excludes services related to roads, airports, railways, etc. The Tribunal found that while Section 65(25b) of the Finance Act excludes such services, Section 65(64) includes management, maintenance, or repair of properties. This inclusion indicates that maintenance or repair of runways is taxable unless specifically exempted. The Tribunal noted that the legislature's retrospective exemption for roads indicates that such activities were taxable, reinforcing the conclusion that runways are not exempt.

4. Retrospective Exemption for Maintenance or Repair of Non-Commercial Government Buildings:
The appellant claimed that maintenance or repair activities on runways at defense airports should be exempt under Section 98 of the Finance Act, 2012, which provides a retrospective exemption for non-commercial government buildings. The Tribunal directed the adjudicating authority to consider this claim, as it was not previously addressed.

5. Abatement for Materials Used in Maintenance or Repair Activities:
The appellant argued for abatement of the value of materials used in maintenance or repair activities under Notification No. 12/2003 and its successors. The Tribunal directed the adjudicating authority to consider this claim during the re-adjudication process.

6. Time-Barred Nature of the Service Tax Demand:
The appellant contended that the service tax demand was time-barred, as the show cause notice was issued on 13/10/2010 for services rendered from 2005-06 to 2009-10. The appellant claimed a bona fide belief that their activities were not liable for service tax. The Tribunal left this issue open for re-examination by the adjudicating authority.

Conclusion:
The Tribunal remanded the case back to the adjudicating authority for reconsideration of the appellant's claims for exemptions and abatements. The adjudicating authority is directed to re-examine the issues in light of the Tribunal's findings and pass a speaking order after providing the appellant a reasonable opportunity to be heard. The appeal was disposed of with these directions.

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