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HC : Airport runways not akin to 'roads'; No tax exemption on repair / maintenance thereof

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  • HC rules in favour of Revenue, holds that exemption to services provided in relation to management, maintenance or repair of roads under Notification No. 24/2009-ST cannot be extended to 'repair of airport runways';
  • Assessee is engaged inter alia in construction of roads for NHAI, CPWD and NMC, construction of runways for Airport Authority of India Ltd, strengthening renewal of roads and improving / surfacing of runways, and Revenue demanded service tax on services of repair / maintenance of roads & airport runways / taxiways / apron ways under “Management, Maintenance or Repair Service” category for the period June 16, 2005 to July 27, 2009;
  • Rejects assessee’s contention that if services in respect of repair of roads & airports were excluded from pre-existing category of “commercial or industrial construction service”, then same were not taxable as “management, maintenance or repair service”; Observes that “in its wisdom, the legislature thought the services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dam would not be necessarily commercial or industrial construction and in any event repair, alteration, renovation, restoration of such utility should be excluded from the purview of the definition of the term “commercial or Industrial construction service”. By this, there is no prohibition for bringing it in another category”;
  • Distinguishing judgments in Tahsildar Singh, Darshan Hosiery Works & Dr. Lal Path Lab Pvt. Ltd., HC rejects assessee’s contention that term “road” is a genus of which runways is the species and hence, repair services rendered qua runways will also be exempted in terms of Sec 97 of Finance Act that provides retrospective exemption to activity of management, maintenance and repairs of road w.e.f. June 16, 2005;
  • Applies common parlance test since both terms are not defined in the Finance Act, states that there is a difference in two terms as 'runways' are specially prepared surfaces for aircrafts unlike roads; Also rejects assessee’s attempt to extend Sec 98 of Finance Act, which grants retrospective exemption to repair / maintenance services provided to non-commercial Govt. buildings, to repair of airports as well, states that the issue does not pertain to whether definition of “airport” itself includes runways;
  • Consequently, HC upholds the order of CESTAT that site formation and excavation services is not exempted under Notification No. 17/2005-ST bearing in mind the site or place where the services are rendered but its location  : Bombay HC
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