Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
Circular No. 110/4/2009-ST.
New Delhi, the 23rd February, 2009.
Subject: Reference from Commissioner Nashik seeking clarification in respect of
levy of service tax on Repair/ renovation/ widening of roads – Regarding.
Representations have been received by the Board pointing out divergent practices
being followed by field formations with regard to levy of service tax on
maintenance and repair of roads.
- Commercial or industrial construction service [section 65(105) (zzq)]
specifically excludes construction or repairs of roads. However, management,
maintenance or repair provided under a contract or an agreement in relation to
properties, whether immovable or not, is leviable to service tax under section
65(105) (zzg) of the Finance Act, 1994. There is no specific exemption under
this service for maintenance or repair of roads etc. Reading the definitions of
these two taxable services in tandem leads to the conclusion that while
construction of road is not a taxable service, management, maintenance or repair
of roads are in the nature of taxable services, attracting service tax.
- The next issue requiring resolution is the types of activities that can be
called as ‘construction of road’ as against the activities which should fall
under the category of maintenance or repair of roads. In this regard the
technical literature on the subject indicate that the activities can be
categorized as follows,-
- Maintenance or repair activities:
I. Resurfacing
II. Renovation
III. Strengthening
IV. Relaying
V. Filling of potholes
- Construction Activities:
I. Laying of a new road
II. Widening of narrow road to broader road (such as conversion of a two lane
road to a four lane road)
III. Changing road surface ( graveled road to metalled road/ metalled road to
blacktopped/ blacktopped to concrete etc)
- The cases may be decided/ revenue should be protected based on the above
classification. Suitable Trade and Public notices may be issued for information
of the trade and field formations.
- Receipt of this Circular may please be acknowledged.
- Hindi Version will follow.
Yours faithfully,
(Unmesh Sharad Wagh)
Under Secretary (TRU)
F. No. 345/ 17 /2008-TRU