2026-VIL-1679-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Exemption under Mega Exemption Notification No.25/2012-ST for works contract service of widening and strengthening a road, including provision of footpath, provided to a Government authority - Appellant rendered works contract service for widening and strengthening of a road, including construction of double lane, slow lane and footpath, to the Public Works (Roads) Department of the State Government, a 'Government Authority' as defined under Notification No.25/2012-ST, and claimed exemption under Entry 13 thereof for services relating to construction of road - The adjudicating authority denied exemption on the ground that only the footpath had been widened/strengthened on the edge of the road and that 'Road' had not been constructed - Whether widening and strengthening of a road, including provision of footpath as part of a composite road-development work order, amounts to construction of a road exempted under Entry 13 of Notification No.25/2012-ST - HELD - The expression 'road' is not restrictively defined under the service tax law, and in its ordinary and legal meaning a public road encompasses its integral components and facilities meant for movement of the public, including pedestrian pathways/footpaths, which cannot be artificially segregated from the road merely to deny exemption - The work, described in the Work Orders as widening and strengthening of the road including footpath, has to be examined as a composite road-development project and not by isolating the footpath component, providing a footpath being part of the construction of a road - The work order was awarded by the Public Works (Roads) Directorate responsible for planning, survey, design, construction and maintenance of roads, and the services of widening/strengthening of road for providing footpath amount to construction of road - The appellant neither charged nor collected service tax from the Government department, bona fide treating the services as exempt - The appellant is eligible for exemption under Entry 13 of Mega Exemption Notification No.25/2012-ST - The demand of service tax is set aside; as the demand is not sustained, the question of interest or penalty does not arise – The appeal is allowed - Service Tax - Invocation of extended period of limitation where demand is based solely on Form 26AS/Income Tax Return data - Show Cause Notice was issued on the basis of figures available in Form 26AS, Income Tax Returns and the Statement of Receipt furnished by the appellant, treating the differential turnover as suppression of taxable value and invoking the extended period under Section 73(1) of the Finance Act, 1994 - Whether the extended period of limitation is invocable where the demand is based solely on Form 26AS/ITR data without independent investigation or evidence of wilful suppression - HELD - Where the demand is based solely on Form 26AS/ITR data, the extended period is not invocable and the demand is liable to be set aside on limitation alone - Suppression of facts and wilful violation to invoke the extended period were claimed only on assumption and presumption, without verification or due diligence, and the Show Cause Notice was issued without going through the relevant facts, figures and documents submitted by the appellant - The term 'suppression' must be construed strictly and does not mean any omission; the act must be deliberate and wilful to evade payment of duty, and mere failure to declare does not amount to wilful suppression in the absence of a positive act on the part of the assessee - The demands confirmed in the impugned order by invoking the extended period of limitation are not sustainable and set aside.
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