Failure To Establish Public Utility Of Internal Roads: CESTAT Remands ₹6.73 Lakh Service Tax Demand [Read Order]
The CESTAT remands a service tax demand, holding that exemption eligibility depends on establishing whether internal roads were meant for public use.
The New Delhi Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the order of the lower authorities and remanded the service tax demand of ₹6.73 lakh, observing that the issue of whether the internal roads were constructed for use by the general public had not been properly examined by the lower authorities.
The appellant, Shri Balaji Construction Co., was registered with the Service Tax Department for the provision of services related to construction. The Service Tax authorities, on the basis of information obtained from the Income Tax Department regarding the receipt of ₹54.50 lakh on which TDS was deducted under Section 194C, claimed that the appellant had failed to pay ₹6.73 lakh in service tax for the FY 2012-13.
On 26 April 2018, the show cause notice was issued by the Service Tax authorities, invoking the extended period of limitation. As the assessee had not responded or appeared for the hearing, the Adjudicating Authority had accepted the demand ex parte.
The assessee in its appeal claimed that the services provided for the renewal of internal roads in Sector-5, Jaipur were for the Jaipur Development Authority (JDA), for which the work order was obtained as a subcontract and therefore the services were exempt under the Mega Exemption
The assessee argued that the work was related to the construction of roads for general public use and that the Commissioner of Appeals did not take into account the order for the work and supporting documents. It was claimed that since the order was given by a government agency, Entry 13(a) and 29(h) would apply.
It was opposed by the revenue that the burden of proof for establishing eligibility for exemption was on the assessee and that no documents were produced to prove that the roads were for general public use. It was also claimed that the appellant did not cooperate in the adjudication proceedings.
The Tribunal comprising Justice Binu Tamta [Judicial Member] and Hemambika R. Priya [Technical Member]noted that the exemption under the Notification No. 25/2012-ST is strictly subject to the condition that the roads are constructed for use by the general public. The Tribunal relied on its earlier decision in the case of Warsi Buildcon, where it was held that public roads are to be distinguished from internal roads to be used for residential or township purposes.
However, the Tribunal noted that the appellant has claimed that the work order has been issued by the JDA, which is a government authority.It held that the issue of public use of the roads needed to be re-examined. Further, the tribunal set aside the impugned order and remitted the matter to the Adjudicating Authority to examine the documents and decide the exemption issue afresh.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
