2013 (10) TMI 1264 - AT - Service Tax

Tribunal exempts toll plaza construction from service tax, grants waiver & stay

M/s. GMR Projects Pvt. Ltd. Versus CST, Bangalore

M/s. GMR Projects Pvt. Ltd. Versus CST, Bangalore - 2014 (35) S.T.R. 785 (Tri. - Bang.) Issues:Whether the construction of toll plaza, cattle crossing facility, parking bay, and rest rooms as part of a highway project constitutes a works contract for the purpose of service tax liability.Analysis:The appellants constructed various facilities as part of a highway project for NHAI, claiming them to be integral to road construction and thus exempt from service tax liability. The dispute arose as to whether these additional facilities fall within the definition of works contract under Section 65(105)(zzzza) for service tax purposes.The appellant argued that all constructed facilities are essential components of the road construction and should not be separately taxed. They relied on precedents like MMK Toll Road Pvt. Ltd. case, where the Tribunal held that toll charges are not subject to service tax as they are part of cost recovery, not a service to NHAI. Another case cited was Archistructural Constructions India Pvt. Ltd. Vs. CCE, where a catering unit in an airport was considered part of the airport itself.On the contrary, the respondent contended that the definition of works contract excludes only roads, implying that other facilities are not exempt. The legislative intent, according to the respondent, is to restrict the exclusion to roads only, not extending it to toll plazas, rest rooms, etc.After evaluating the arguments, the Tribunal found merit in the appellant's case. They observed that the facilities provided are essential for a highway and cannot be isolated from road construction. The temporary nature of toll plazas, their demolition after cost recovery, and the functional necessity of rest rooms for maintenance staff and drivers were crucial factors in determining that these facilities are integral to the highway project.Consequently, the Tribunal ruled in favor of the appellants, granting a waiver of predeposit and a stay against the recovery of dues during the appeal process. The decision highlighted the interconnected nature of the constructed facilities with the highway project, supporting the exemption from service tax liability.In conclusion, the judgment clarified the interpretation of works contract in the context of additional facilities constructed alongside roads, emphasizing the functional necessity and integration of such facilities within the broader infrastructure project.