Roads Inside Industrial Park Can Be Treated As ‘Roads For General Public Use’; Restricts Recovery To Normal Limitation Period: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has held that roads constructed within an industrial park may still qualify as roads meant for use by the general public if they are interconnected with public road infrastructure and do not have restricted access. However, the bench of Binu Tamta (Judicial Member) and P.V. Subba Rao, Member (Technical Member) has observed that the department could not invoke the extended limitation period, stating that the issue involved interpretation and there was no suppression of facts by the assessee. The appellant/assessee a company engaged in providing construction services and developing the “Solitaire Industrial Park-II” project at Bagru, Jaipur. The project had received approval from the Jaipur Development Authority (JDA) for conversion and development of land for residential, commercial and industrial purposes. The developer had undertaken several infrastructure activities, including landscaping, plot demarcation, construction of roads, electrical installations, sewerage works, transformers, and water facilities. During departmental audit, it was noticed that the company had availed CENVAT credit on service tax paid for road construction services under works contract arrangements. The department alleged that the roads in question fell within the exempt category under Serial No.13(a) of Notification No.25/2012-ST, which grants exemption to services related to construction of roads intended for use by the general public. Since exempt services do not permit availment of CENVAT credit under Rule 6 of the CENVAT Credit Rules, the department issued a show-cause notice proposing recovery of CENVAT credit amounting to ₹35.50 lakh along with interest and penalties. The assessee argued that the roads inside the industrial park were not public roads but constituted internal infrastructure exclusively meant for occupants and business users of the industrial park. It submitted that because the roads formed part of private property, they could not be treated as roads for public use. The company further argued that if the roads were indeed exempt from service tax, then it would have been entitled to seek refund of the tax paid, and therefore denial of credit would effectively result in double taxation. It also challenged the invocation of the extended limitation period, contending that all transactions had been properly disclosed in books and records. The Tribunal examined the exemption notification and observed that exemption under Serial No.13(a) is available for construction and related services in respect of roads intended for use by the general public. The Bench noted that material on record, including project brochures and the Jaipur Master Plan, indicated that roads inside the industrial park crossed through the project and were connected with already existing public roads. Therefore, these roads were not solely confined for internal use within the industrial park. CESTAT observed that merely because roads are situated within a private industrial park would not automatically make them private roads with restricted access. According to the Tribunal, the decisive factor is whether members of the public possess access rights and whether the roads form part of wider public infrastructure. The Bench concluded that the roads in question had utility extending beyond the industrial park itself and therefore fell within the scope of exempted services under Notification No.25/2012-ST. The Tribunal also examined a precedent involving Formula One race tracks where exemption had been denied because the public had no right of access to the track. It distinguished that decision, noting that race tracks involve restricted entry and cannot be equated with roads connected to public infrastructure. The Tribunal provided relief to the assessee. It found no evidence of deliberate suppression or intent to evade tax. The Bench observed that the assessee had acted under a bona fide belief that the roads were meant for private use and therefore outside the exemption provisions. Further, the Tribunal noted that the situation was revenue-neutral because if service tax was not payable, the department would eventually have had to refund the tax paid along with interest. It held that the matter involved interpretation of law and therefore invocation of the extended limitation period was unjustified. CESTAT upheld the findings on merits that the roads were covered by the exemption notification but set aside the invocation of the extended period. The matter was remanded only for recalculation of recoverable CENVAT credit for the normal period along with applicable interest and penalty. The Tribunal further observed that the assessee would be entitled to refund of service tax paid for the relevant period. Case Details Case Title: M/s. Krishna Kunj Pvt. Ltd. Versus Commissioner of CGST & Central Excise Citation: JURISHOUR-1277-CES-2026(DEL) Case No.: Service Tax Appeal No.52453 of 2022 Date: 15.05.2026 Counsel For Appellant: Agarwal Sanjiv and Ms. Neha Somani, Chartered Accountants Counsel For Respondent: Aejaz Ahmad, Authorised Representative Click Here To Read Order Read More: Customs Broker Can’t Be Faulted Just Because Exporter’s GST Registration Was Previously Cancelled: CESTAT

Roads Inside Industrial Park Can Be Treated As ‘Roads For General Public Use’; Restricts Recovery To Normal Limitation Period: CESTAT

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