2026-VIL-1215-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Taxability of Road Cutting charges and Rural Electrification Services - The appellant is implementing IT projects involving laying of optical fibre cables in rural areas, receives road cutting and rural electrification services from government and local authorities – Demand of service tax on payments made towards road cutting charges, electrical inspection fees, and other charges, contending that the gross amount charged exceeds the exemption threshold prescribed under Notification No. 25/2012-ST as amended by Notification No. 22/2016-ST - Whether the services rendered fall within the exemption notification and whether service tax is liable to be discharged under the reverse charge mechanism - HELD - The activity of road cutting falls squarely within Entry 13 of the mega exemption notification which exempts services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a road for use by general public - Further, the services also satisfy the conditions stipulated under Entry 60 of the notification, which exempts services provided by government or local authority in relation to functions entrusted to a Panchayat under Article 243G of the Constitution. The provisions of Article 243G specifically provide for roads and rural electrification, which directly correspond to the services received by the appellant - However, the benefit is restricted by applying Notification No. 22/2016, which limits the exemption to cases where the gross amount charged does not exceed a monetary threshold. Since the payments made by the appellant exceed this permissible limit, the exemption notification cannot be extended - The tribunal sets aside the demand raised invoking the extended period of limitation, holding that an issue pertaining to the applicability of exemption notification being an interpretational matter does not justify invocation of extended period, and no malafide intention can be attributed to a government undertaking - The impugned order is set aside except to the extent of applicability of the Notification No. 22/2016-ST - The appeal is disposed of
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