The Central Board of Indirect Taxes and Customs (CBIC) has clarified that, Service Tax not applicable on payments by NHAI to toll operators allowing Free access to Roads during Demonetisation period.
The CBIC Circular said that “Service by way of access to a road or bridge on payment of toll charges” is included in the Negative List. That means that no service tax can be levied on this service. The service that is provided by toll operators before 8-11-2016, during the period 8-11-2016 to 1-12-2016 and after 1-12-2016 is that of access 10 a road or bridge. When the service remained the same throughout and it continued to be in the Negative List, there can be no legal reason to treat it differently for the period 8-11-2016 to 1-1Z.-2016”.
Section 66E of the Finance Act, 1994 has to be read along with the other provisions of that Act. A “declared service” cannot, therefore, be assumed to have an overriding or omnibus character over other provisions. Thus, one cannot apply the concept of “declared service” to remove a service from the Negative List and make it a taxable service.
The Circular also clarified that “The service that is provided by toll operators is that of access to a road or bridge, toll charges being merely consideration for that service. On MoRTH/ NHAI” s instructions, for the period 8-11-2016 to 1-12-2016 this service of access to a road/bridge was continued to be provided without the collection of consideration from the actual user of service. Consideration came from the project authority. The fact that for this period, for the same service, consideration came from a person other than the actual user of service, does not mean that the service has changed”.