Smooth Road Ahead – No Service Tax on Road Repair
IT was a long journey through the pot holed road of Indian Taxation.
It all started with a letter from the Madhya Pradesh Chief Minister, Shivraj Singh Chauhan nearly two years ago to the Finance Minister, seeking exemption from Service Tax on maintenance or repair of roads.
Promptly the Department swung into action and Show Cause Notices started flying in all directions.
In TIOL-DDT 798 - 06.02.2008, we asked, Is it worth taxing the road repair? 99% of the roads belong to the Government – state or central, municipal bodies, panchayats. As mentioned earlier, should the cost of maintaining the horrible roads be enhanced for these fund starved bodies? Perhaps the FM can graciously accede to the request of the Madhya Pradesh CM and exempt road repair from Service Tax and for this he need not wait for the budget.
Vide Circular No. Dated: February 23, 2009, Board clarified that maintenance or repair of roads is a taxable service under the purview of ‘Management, Maintenance or Repair Service'.
In DDT 1079 26.03.2009, we reported a case where the Commissioner (Appeals) held that road repair was not liable to Service Tax.
This issue was the hot topic debated in our seminars last year and the matter was placed before the senior officers of the Department including the Chairman of CBEC.
Dr. S. Vijay Kumar, Chairman, Builders Association of India (Vizag Chapter), who had been relentlessly pursuing this matter had written an article in TIOL- Is road-laying service liable for Tax?
We had also carried an article by G Jayaprakash, - Service Tax on road repairs - When in doubt, consult Higher Authority