Road construction exemption covers preparatory earthwork, embankment and allied site activities forming part of the same works

Earthwork, embankment formation, road rolling and water filling undertaken as sub-contracted road works were treated as integral and essential parts of road construction, not as activities severable from the exempt service. A harmonious reading of Serial No. 13(a) of Notification No. 25/2012-Service Tax was applied to include preparatory and allied works within "construction of a road." On that basis, the activities fell within the exemption and the related service tax, interest and penalty were stated to be unsustainable.

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Issues: Whether earthwork, embankment formation, road rolling and water filling undertaken as sub-contracted activities for road works were covered by the exemption for services provided by way of construction of a road under Serial No. 13(a) of Notification No. 25/2012-Service Tax dated 20.06.2012.

Analysis: The work orders showed that the appellant was engaged in embankment construction, earthwork, rolling and watering, all of which formed part of the chain of activities necessary for road construction. Such activities, though preparatory in character, were held to be intrinsic and essential components of road construction and could not be artificially severed from the exempted service. A harmonious reading of the exemption entry required the term "construction" to include the full range of activities culminating in road construction, including site preparation and allied works. The Tribunal also relied on earlier decisions treating similar road-related activities as part of the exempt construction of roads.

Conclusion: The disputed activities were held to fall within the exemption for road construction services, and the demand of service tax, interest and penalty was not sustainable.

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