No Service tax on Road Toll Charges under BAS

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CESTAT, MUMBAI BENCH

Ideal Road Builders (P.) Ltd.

v.

Commissioner of Service Tax, Mumbai

Order Nos. S/03/13/CSTB/C-I & A/04/13/CSTB/C-I
Application No. ST/S/2727 of 2012
Appeal No. ST/770 of 2012

Date of Pronouncement – 14.12.2012

 

If on the basis of an agreement between the State authority and the concessionaire for construction of roads, the contractor is authorised to collect the toll charges from the users of the roads for the services rendered and the entire activity is done on Build-Own/Operate-Transfer basis, there is no service tax liability.

Construction of roads has been specifically excluded from the scope of service tax levy both under “Commercial and Industrial Construction Service” and “Works Contract Service”. Further repair and maintenance of roads have also been exempted from service tax retrospectively in this year’s budget. Thus the intention of the Government is to keep out road construction activity from the purview of service tax. If that be so, how can service tax be levied on the very same activity under Business Auxiliary Service (BAS)? Such a view does not appeal to any reason or logic.