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2016 Supreme(Bom) 842
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. DHARMADHIKARI & G.S. KULKARNI, JJ.
M/s. D.P. Jain and Company Infrastructure Pvt. Ltd. – Petitioner
Versus
Union of India – Respondent
WRIT PETITION NO. 7890 OF 2015 & CENTRAL EXCISE APPEAL NO. 51 OF 2014
Decided On : 18-07-2016
For the Petitioner:Mr. V. Sridharan, Senior Advocate with Mr. Prakash Shah, Mr. Jas Sanghavi and M/s. PDS Legal.
For the Respondent: Mr. Pradeep S. Jetly with Mr. Jitendra B. Mishra.
Headnote:
The petitioner, a company engaged in the business of construction of roads, runways, and other related activities, challenged the service tax demand raised by the revenue authorities for the period 2005-06 to 2009-10. The petitioner contended that the activities of repair and maintenance of roads and runways were exempt from service tax under various notifications and circulars issued by the Central Government. The revenue authorities, on the other hand, argued that the activities undertaken by the petitioner fell under the category of "management, maintenance, or repair" service, which was taxable under the Finance Act, 1994. The CESTAT upheld the demand raised by the revenue authorities, holding that the repair and maintenance of runways were not covered under the exemption granted to roads and that the activities undertaken by the petitioner were taxable under the category of "management, maintenance, or repair" service. The petitioner filed a writ petition in the High Court challenging the CESTAT order.
Fact of the Case:
The petitioner, a company engaged in the business of construction of roads, runways, and other related activities, challenged the service tax demand raised by the revenue authorities for the period 2005-06 to 2009-10. The petitioner contended that the activities of repair and maintenance of roads and runways were exempt from service tax under various notifications and circulars issued by the Central Government. The revenue authorities, on the other hand, argued that the activities undertaken by the petitioner fell under the category of "management, maintenance, or repair" service, which was taxable under the Finance Act, 1994.
Finding of the Court:
The High Court upheld the CESTAT order, holding that the repair and maintenance of runways were not covered under the exemption granted to roads and that the activities undertaken by the petitioner were taxable under the category of "management, maintenance, or repair" service. The court found that the definition of "commercial or industrial construction" service in the Finance Act, 1994, specifically excluded the repair and maintenance of roads and airports, and that the activities undertaken by the petitioner were not covered by any other exemption notification or circular.
Issues: 1. Whether the repair and maintenance of runways were covered under the exemption granted to roads under various notifications and circulars issued by the Central Government? 2. Whether the activities undertaken by the petitioner fell under the category of "management, maintenance, or repair" service, which was taxable under the Finance Act, 1994?
Ratio Decidendi: 1. The court held that the repair and maintenance of runways were not covered under the exemption granted to roads under various notifications and circulars issued by the Central Government. The court found that the definition of "commercial or industrial construction" service in the Finance Act, 1994, specifically excluded the repair and maintenance of roads and airports, and that the activities undertaken by the petitioner were not covered by any other exemption notification or circular. 2. The court held that the activities undertaken by the petitioner fell under the category of "management, maintenance, or repair" service, which was taxable under the Finance Act, 1994. The court found that the activities undertaken by the petitioner were not covered by any exemption notification or circular, and that the activities fell within the definition of "management, maintenance, or repair" service.
Final Decision: The High Court upheld the CESTAT order, holding that the repair and maintenance of runways were not covered under the exemption granted to roads and that the activities undertaken by the petitioner were taxable under the category of "management, maintenance, or repair" service.
S.C. DHARMADHIKARI, J.
1. On the above writ petition, we had granted Rule on 22nd February, 2016 and directed that it be heard along with Central Excise Appeal No. 21 of 2015.
2. Rule on interim relief in the writ petition was made returnable on 21st March, 2016 and after both sides consented, we indicted to them that the writ petition itself will be disposed of finally at the stage of interim relief. Hence, by consent of both sides, we heard the matters and are disposing them of finally by this judgment.
3. The writ petition is directed against the order-in-original dated 28th November, 2014 passed by respondent no. 2.
4. The petitioner is a company incorporated under the Indian Companies Act, 1956, having registered office at the address mentioned in the cause title. The first respondent is Union of India and the second respondent is the Commissioner of Central Excise, Customs and Service Tax, Nagpur. The petitioner is holding Service Tax Registration No. AACCD1376KST001 under the categories of “Transportation of Goods by Roads” and “Site Formation and Clearance, Excavation and Earth Moving and Demolition Service”
5. The petitioner is inter-alia engaged in the business of:-
(i) Construction of roads for NHAI (National Highway Authority of India), CPWD (Central Public Works Department) and NMC (Nagpur Municipal Corporation).
(ii) Construction of runways for Airport Authority of India Ltd.
(iii) Strengthening renewal of roads.
(iv) Improving and surfacing of runways.
(v) Site preparation, excavation for further construction of roads either on its own behalf or for the clients having contracts for construction of roads.
6. The present dispute pertains to (i) repair and maintenance of roads; (ii) repair and maintenance of airport runways; (iii) site formation activity undertaken at roads. The dispute in the present case pertains to period from 2005-06 to 2009-10.
7. In the month of July, 2010, investigations were conducted by the officers of Service Tax Cell of Central Excise Headquarters, Nagpur, in connection with the alleged non-payment of service tax on the services rendered by the petitioners.
8. Following correspondences were exchanged between the department and the petitioners:-
(i) The Superintendent, Service Tax, Headquarters, Nagpur, by his letter dated 9th July, 2010 called upon the petitioner to submit the details of work done and the receipts for the same, during the period 2004-05 to 2009-12.
(ii) The petitioner, vide letter dated 19th August, 2010, filed the documents as directed by the Superintendent in the aforesaid letter.
9. Based on the scrutiny of the records of the services rendered during the financial years 2005-06 to 2009-10, a show cause notice dated 14th October, 2010 was issued to the petitioner, calling upon it to show cause as to why service rendered by it should not be classified under the categories of (a) Management, Maintenance or Repair; (b) Commercial and Industrial Construction Service and (c) site formation and excavation clearance service.
10. Further, the petitioner had to show cause as to why service tax amounting to Rs.10,25,72,125/- should not be demanded from it under the provisions of section 73(1) of the Finance Act, 1994. Interest under section 75 was proposed to be recovered and penalties under sections 76, 77 and 78 of the said Act were proposed to be imposed on the petitioner.
11. The petitioner filed an elaborate reply dated 1st August, 2011 to the show cause notice inter-alia raising the following contentions:-
(i) The activities of repair, alteration, renovation or restoration or similar services were covered by the definition of pre-existing category “commercial or industrial construction service” as defined in clause (25b) of section 65 of the Act and such services when rendered in respect of roads and airports were excluded from the levy of service tax and therefore, the same could not be levied under the category of “management, maintenance and repair” service.
(ii) Amongst the vari
