No Service Tax Exemption for Roofs Over Mandi Roads: CESTAT Rules Structure Not Meant for General Public Use [Read Order]

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that there is no service tax exemption for roofs built over mandi roads, as these structures are not meant for general public use.

The assessee, the Rajasthan State Agriculture Marketing Board, had appealed before the CESTAT against the order passed by the Commissioner (Appeals) for confirming the demand of Rs. 14.23 lakhs under Section 73(2) of the Finance Act, 1994, along with interests and penalties.

3000 Illustrations, Case Studies & Examples for Ind-AS & IFRS, Click Here

Coming to the facts of the case, the appellant had issued 3 work orders to M/s. Laxmi Narayan Agarwal, the service provider. It was observed by the department that neither the service provider nor the appellant paid any service tax on these services.

During the investigation conducted by the department, it was observed that as per Notification No. 30/2012-ST (entry 9), in works contracts, service tax was to be shared equally between the service provider and recipient. Since the appellant, as service recipient, failed to pay their 50% share, a Show Cause Notice was issued, and later on, the demand was confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals).

Several grounds were raised by the assessee in the appeal, and one of them was that the roofing work was carried out for internal roads where trucks and other vehicles loaded with agricultural produce are parked until the goods are unloaded or sold, and thus the above-mentioned structure falls were exempted by S.No. 13(d) of the notification no. 25/2012-ST.

Know the complete aspects of tax implications of succession, Click here

The relevant portion of the notification is as follows:

“13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) a road, bridge, tunnel or termination for road transportation for use by general public;”

The tribunal noted that the dispute was not about the road construction but about the roof over it, and these roads aren’t for public use, as they're meant for buyers and sellers in the mandi.

The bench observed that nothing in S.No. 13(a) covers the services received by the appellant.

The impugned order was vehemently supported by the department’s counsel.

Delhi CESTAT, comprising Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member), dismissed the assessee’s appeal.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates