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2023 (6) TMI 240 - AT - Service TaxLevy of service tax - management, maintenance or repair service - site formation and clearance, excavation and earthmoving and demolition service - extended period for demand of tax - imposition of penalty. Management, maintenance or repair service - HELD THAT - It is found that the Commissioner of Service Tax, Chennai has exempted all the Services provided in relation to repair of roads carried out for various Government Departments and local authorities, but relying on the decision of the Tribunal in the case of LARSEN TOUBRO LTD. (ECC DIVISION) VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 2009 (12) TMI 461 - CESTAT, BANGALORE , it has been held that exemption from payment of Service Tax under maintenance or repair service (MRS) is available only for repair / re-laying of public roads and infrastructure facilities are public goods and only infrastructure items of public utility or civic amenity are covered under the excluded category. The question as to whether the N/N. 25/2012-S.T. dated 20.06.2012, would have a retrospective effect for the period from 2005 to 2009 was also answered by the Notification No. 24/2009-S.T. dated 27.07.2009 which was issued under Section 93 of the Finance Act. The special provision for exemption in certain cases relating to Service Tax on repair of roads was made in Section 97 of the Finance Act, 2012. Notification No. 24/2009-S.T. states that the exemption has been extended even for the earlier period from 16.06.2005 to 26.07.2009 - the notification states that In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service, referred to in sub-clause (zzg) of clause (105) of section 65 of the Finance Act,1994, provided to any person by any other person in relation to management, maintenance or repair of roads, from the whole of the service tax leviable thereon under section 66 of the said Finance Act. The Mumbai Bench of the CESTAT in the case of COMMR. OF C. EX. CUS., AURANGABAD VERSUS RAJDEEP BUILDCON PVT. LTD. 2015 (12) TMI 326 - CESTAT MUMBAI has held first appellate authority while setting aside such demands has also not given any reasoning which could be appreciated by us. In the absence of any reasoning by the lower authorities, we find that this particular issue of eligibility to avail Cenvat credit on the various services, which are consumed by the appellant for providing taxable output services, needs reconsideration by the adjudicating authority. Thus, the demand pertaining to maintenance and repair service in respect of roads is not sustainable in view of the exemption under Section 97 of the Finance Act, which has retrospective effect for the period from 16.06.2005 to 26.07.2009. For according exemption, no distinction needs to be made between private and public roads. Demandability of Service Tax for the consideration received towards hiring of JCB and Tipper - HELD THAT - The supply of tangible goods under Section 65(105)(zzzzj) of the Finance Act, as a separate category, came into effect from 16.05.2008 whereas the demand was raised under maintenance or repair service against the appellant for the period from 2005-06 to 2007-08 - Even if it is assumed that the hire charges on account of JCB and Tippers are separately accounted for in the financial statements of the appellant, the demand is not sustainable as the services were provided prior to the introduction of supply of tangible goods as a separate category under Section 65(105)(zzzzj). The above demand was raised in this appeal under maintenance or repair service as these were reportedly hired to those customers / service providers for repair / maintenance of the roads. However, the main service of these agreements / contracts is maintenance or repair service of roads, which itself was exempted with retrospective effect from 2005 to 2009. As such, the demand of Service Tax on hiring of JCBs, Tippers, etc., is not maintainable. Extended period of limitation - penalty - HELD THAT - As there was considerable confusion during the said period relating to the taxability under maintenance or repair service in respect of roads for infrastructure projects, it is found that invoking the extended period is not justified. So, the penalties imposed under Sections 77 and 78 of the Finance Act, 1994 set aside. Site formation and clearance, excavation and earthmoving and demolition service - extended period of limitation - HELD THAT - The demand is raised in respect of site formation and clearance, excavation and earthmoving and demolition service on the basis of TDS Certificate issued by the Executive Engineer, SIDCO wherein it was mentioned that the assessee undertook filling-up of the low-lying area in eastern side of SIDCO Industrial Estate. The assessee s contention that the site formation service has been undertaken in connection with any laying or repair of road is not acceptable in the absence of any evidence. Even during the hearing before us, the appellant has never produced any evidence relating to the above activity. The finding of the lower authority upheld that the activity undertaken by the appellant squarely falls under the scope of site formation and clearance, excavation and earthmoving and demolition under Section 65(97a) of the Finance Act, 1994 and we hold that the assessee is liable to pay Service Tax of Rs.6,73,598/-, as confirmed by the learned Adjudicating Authority along with penalty under Section 78 of the Finance Act, 1994. The material facts were unearthed by the Department and hence, non-furnishing of any facts would clearly amount to suppression of acts with an intention to evade tax within the meaning of Section 73(1) ibid. Hence, the Revenue is justified in invoking the larger period of limitation for this activity. So, the demand and penalty in respect of this activity are, therefore, required to be sustained. The demand and penalty insofar as it relates to the maintenance or repair service undertaken by the appellant are set aside. However, the demand and penalty in respect of site formation and clearance, excavation and earthmoving and demolition service are sustained - Appeal allowed in part.
Issues Involved:
1. Whether the demand of Service Tax raised for the services provided by the appellant is justified under the category of 'management, maintenance or repair' service. 2. Whether the demand under the category of 'site formation and clearance, excavation and earthmoving and demolition' service is justified. 3. Whether the extended period for demand of tax and for imposition of penalty is invocable or not in the facts of this case. Summary: 1. Demand of Service Tax under 'Management, Maintenance or Repair' Service: The Commissioner exempted services related to road repair for Government Departments but held that services for private entities were taxable. The appellant argued that maintenance and repair of roads were exempted retrospectively under Section 97 of the Finance Act, 2012, for the period from 16.06.2005 to 26.07.2009. The Tribunal agreed, citing the retrospective exemption and relevant case law, and held that no distinction between private and public roads was necessary for exemption. Consequently, the demand for Service Tax on maintenance and repair services was set aside. 2. Demand under 'Site Formation and Clearance, Excavation and Earthmoving and Demolition' Service: The Commissioner confirmed the demand for Service Tax on site formation activities for SIDCO, classifying it under Section 65(97a) of the Finance Act, 1994. The appellant contended that these activities were part of road maintenance, but failed to provide evidence. The Tribunal upheld the demand and penalty, finding that the activity fell squarely under the specified service category. 3. Extended Period for Demand and Penalty: The Tribunal found considerable confusion regarding the taxability of road maintenance services during the relevant period. Hence, invoking the extended period for demand and penalties under Sections 77 and 78 was not justified for maintenance and repair services. However, for site formation services, the Tribunal upheld the extended period and penalties due to suppression of facts by the appellant. Conclusion: The appeal was partly allowed. The demand and penalties related to maintenance or repair services were set aside, while those related to site formation and clearance services were sustained.
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