By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Runways not equivalent to roads and thus not covered by any exemption notification or any section under the Finance Act, 1994
Facts: The appellants discharged service tax under GTA services, Site Formation and Clearance, Excavation, Earth Moving and Demolition Services. They were also engaged in repairs and strengthening of roads, improvement and resurfacing of runways for airport authorities & military airbases and construction of toll plazas on which service tax was not discharged and the department contended to levy and confirmed the same alongwith interest and penalties. The appellants contended that service tax on management maintenance and repair of roads was exempted from service tax vide Notification No.24/2009-ST dated 27-07-2009 and further vide insertion of section 97 in the Finance Act, 2012 for the prior period 16-06-2005 to 26-07-2009 and also contended that runway was nothing but a species of road which was also excluded from the definition of “Commercial or Industrial Construction Service”. Further, in respect of the construction of runways, they contended that part of it related to defence airports which were non-commercial government buildings and thus exempt vide section 98 as inserted in the Finance Act, 2012.
The respondents submitted to remand the matter pertaining to the exemption u/s. 97 and 98 of the Finance Act, 2012 as they were inserted subsequently and strongly refuted the plea that runways could be considered as a specie of road, in the light of the definition of ‘runway’ according to International Civil Aviation Organisation (ICAO). They, relying upon Nirode Chandra Mukherjee vs. Chairman of Commissioners AIR 1936 Cal 506 and Sarat Chandra Ghatak & Ors vs. Corporation of Calcutta and Anr Air 1959 Cal 36, further contended that for considering the ‘runway’ as a ‘road’, public access was a must.
Held:
If the definition of ‘Commercial or Industrial Construction Service’ excluded construction of roads there would have been no need to exempt the same vide a notification and further vide insertion of a section and thus the Hon. Tribunal remanded the matter considering the retrospective exemption available vide the newly inserted sections 97 read with Notification No.24/2009-ST dated 27-07-2009 and section 98 of the Finance Act, 2012 providing clear direction that the benefit of exemption available to maintenance & repair of roads will not ipso facto apply to runways.
