The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that the activity of construction of roads is beyond service tax net.
The counsel who appeared for the appellant pointed out that the demand of service tax has been raised against the appellant in relation to construction of Approach Roads and Residential Premises within the factory of Classic Marble Company Private Limited.
The counsel also pointed out that they were engaged in the construction of rights within the factory premises. The counsel argued that the construction or roads was excluded categorically from the definition of works contract Section 65 (105) (zzzza) and therefore was not a taxable activity and relied on the Circular issued by CBEC.
The counsel further relied on the Circular B2/8/2004-TRU dated 10.09.2004 (Para 13.4), Circular No. B1/6/2005-TRU dated 27.07.2005 (Para 14.4 to 14.6) and Circular No. 110/4/2009-ST dated 23.02.2009 (Para 2 and 3).
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is apparent from the above Circular that construction of road is excluded from service tax net. In light of above Circulars, it is apparent that the activity of construction of roads is beyond the service tax net and therefore, demand of service tax on construction of road cannot be sustained. The same is set aside and appeal to that extent is allowed.”
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