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TMI Blog2025 (3) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... re that during the period from 2007-08 to 2008-09, the appellant had undertaken contract for construction of approach road to the plant site of M/s. JUD Cements (P) Limited, Meghalaya. In the process of construction of approach road to the plant, the appellant also acquired some land as a 'pure agent' of the cement plant. 2.1. The Department initiated an investigation against the appellant on the allegation that the appellant had not obtained Service Tax Registration and had not discharged Service Tax on the taxable services rendered to M/s. JUD Cements (P) Ltd. On the basis of the investigation, a Show Cause Notice dated 19.10.2012 was issued and after due process, the said notice was adjudicated resulting in the impugned order, which is the subject matter of the present appeal. 3. The appellant has primarily made the following submissions: - a) for the year 2007-08: i. They have sold total value of machinery worth Rs.2,08,01,562/- to M/s. JUD Cements (P) Ltd., but in the impugned order, the ld. adjudicating authority considered only an amount of Rs.1,60,85,351/- and thus the additional amount of Rs.47,16,209/- is liable to be deducted from the taxable value. ii. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r activities, referred to in sub-clause (zzza) of clause (105) of section 65 of the Finance Act, provided to any person by any other person in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams, ports or other ports, is exempt from the whole of service tax leviable thereon under section 66 of the said Finance Act, 1994. * The Ld. Commissioner failed to consider that construction of road whether public or private is not the criterion for getting the benefit under notification No.17/2005-ST dated June 7, 2005. The criterion for exemption is that the activity of construction of road should be taken on the basis of separate recognizable contract. The learned Commissioner failed to appreciate that from the invoices enclosed in the said notice, it is clear that the activity of road construction has been undertaken by a separate contract tax and hence is eligible for exemption from service tax. * The Ld. Commissioner erred in distinguishing the roads being public or private while examining the eligibility of notification No.17/2005-ST dated June 7, 2005 when no such criteria is present is the body of the said law.) notification and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived Rs.4,17,89,638/- in the year 2007-08 towards construction of road, which is specifically exempted from the purview of Service Tax. They have cited the Letter F.No.B1/6/2005-TRU dated July 27, 2005 in support of this contention. In support of the view that road construction is not liable to Service Tax, the appellant has also placed reliance on the decision in the case of M/s. Rajendra Singh Bhamboo vs Commissioner of Central Excise and Service Tax, Jaipur-I [Final Order No. 50968 of 2018 dated 13.03.2018 in Service Tax Appeal No. 55339 of 2013 - CESTAT, New Delhi] wherein while examining the definition of Commercial and Industrial Construction Service under Section 65(105)(zzq) of the Finance Act, 1994, the Bench held as under: "On perusal of the above definition, it would reveal that construction of roads is excluded from the preview of such taxable service. The definition of taxable service does not specify the type of roads, whether private or public for the purpose of consideration of such exclusion clause. Since the definition is specific to service provided in respect of road only, in our considered view, it cannot be interpreted that only construction of public roa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rports, railways, transport terminals, bridges, tunnels, dams, ports or other ports, is exempt from the whole of service tax leviable thereon under section 66 of the said Finance Act, 1994. However, we find that the Ld. Commissioner has not extended the benefit of the said notification on the ground that the road constructed is not for the use of general public. In this regard, we observe that construction of road being private or public is not the criterion for eligibility to the benefit under Notification No.17/2005-ST dated June 7, 2005. The criterion for exemption is that the activity of construction of road should be undertaken on the basis of a separate recognizable contract. The Ld. Commissioner failed to appreciate that from the invoices enclosed in the said notice, it is clear that the activity of road construction has been undertaken by a separate contract. We observe that the Ld. Commissioner erred in distinguishing the roads being public or private while examining the eligibility to Notification No.17/2005-ST dated June 7, 2005 when no such criteria is present is the body of the said notification. Accordingly, we hold that by virtue of Notification No. 17/2005-ST dt. 07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue is also required to be remanded back to the adjudicating authority. 8. Regarding the penalty imposed on the appellant, we observe that the service tax liability is to be re-quantified as per the discussions in the previous paragraphs and hence, the demand of Service Tax along with interest and penalty confirmed in the impugned order is set aside. On re-quantification of their Service Tax liability, the adjudicating authority may decide the liability of penalty, if any required, afresh, based on his findings. 9. Further, we observe that the appellant has claimed that they have already deposited Service Tax to the tune of Rs.13,14,171/- along with interest of Rs.10,26,264/-. This needs to be verified. If the payment of service tax and interest is found to be correct, then the same may be appropriated against their service tax liability. 10. In view of the above discussions, we pass the following order: (i) We hold that the demand of service tax confirmed with respect to construction of road is not sustainable and accordingly, the same is set aside. (ii) We hold that by virtue of Notification No. 17/2005 ST Dt. 07.06.2005, the appellant is eligible for the exemption provide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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