Service tax exemption and limitation principles bar demand on road works, subcontract activity and trading-related supplies.

Services for construction of roads and bridges for public use fell within Notification No. 25/2012-ST, and subcontract works on the same project were also covered by the same exemption structure. Goods supplied were treated as trading activity within the negative list under section 66D(e) of the Finance Act, 1994, so the service tax demand on merits could not be sustained. Limitation also failed because the department had already called for and received the relevant records, and the demand was based on information already available to it, so suppression of facts was not established. The service tax demand, interest, late fee and penalty were not sustainable.

---

---

Issues: (i) whether the service tax demand on services rendered to the Border Roads Organisation and on subcontract works was sustainable on merits; (ii) whether the demand was barred by limitation for want of suppression of facts.

Issue (i): whether the service tax demand on services rendered to the Border Roads Organisation and on subcontract works was sustainable on merits.

Analysis: The services rendered for construction of roads and bridges for public use were covered by Sl. No. 13(a) of Notification No. 25/2012-ST dated 20.06.2012. The subcontract works undertaken on behalf of the contractors were also covered by Sl. No. 29(h) read with Sl. No. 13(a) of the same notification. The goods supplied were treated as trading activity falling within the negative list under section 66D(e) of the Finance Act, 1994.

Conclusion: The demand was not sustainable on merits and was against the assessee.

Issue (ii): whether the demand was barred by limitation for want of suppression of facts.

Analysis: The department had already sought the relevant records in 2016 and the assessee had furnished the details. The notice was issued later, and the demand was founded on Form 26AS information already within the department's reach. On these facts, suppression of facts was not established.

Conclusion: The demand was barred by limitation and was against the assessee.

Final Conclusion: The impugned demand of service tax, interest, late fee, and penalty could not be sustained, and the appeal was allowed.

Ratio Decidendi: Where the services are covered by a specific exemption or the negative list, and the department already had access to the relevant facts, a service tax demand and penal consequences cannot be sustained, including on extended limitation.

---