IAF Runway Resurfacing Covered By Retrospective Service Tax Exemption: CESTAT Delhi Allows Infra Company's Plea

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at New Delhi has recently set aside the rejection of a service tax refund claimed by G.R. Infraprojects Ltd. for resurfacing works carried out at an Indian Air Force runway.

The tribunal held that the retrospective exemption restored by Parliament squarely applied in the instant case.

In an order dated January 14, 2026, a coram comprising Judicial Member Binu Tamta and Technical Member Hemambika R. Priya set aside the orders of the department and the Commissioner (Appeals) that had denied the refund.

The dispute arose from a contract awarded to G.R. Infraprojects by the Military Engineer Service (MES), a department under the Ministry of Defence, for resurfacing of the runway and allied works at Air Force Station, Naliya, under a December 2013 agreement. At the time, such services were exempt from service tax under a 2012 notification.

After the exemption was withdrawn with effect from April 1, 2015, the infrastructure company paid service tax for the period from April 2015 to February 2016.

The exemption was later restored retrospectively by the insertion of Sections 102 and 103 into the Finance Act, 1994 through the Finance Act, 2016.

When G.R. Infraprojects sought a refund, the department rejected the claim on the grounds that runway resurfacing was neither a “civil structure” nor “original work,” that stamp duty and certification conditions were not met, and that the refund was barred by unjust enrichment. These findings were upheld in appeal.

Allowing the infra company's appeal, the tribunal held that airport runways are civil structures and that resurfacing, relaying, and reconstruction activities amount to repair and maintenance of civil structures as well as “original works.”

It noted that the department had earlier accepted identical services as exempt and observed, “The Department having accepted that resurfacing and relaying of runways qualify as repair and maintenance of civil structure under Notification 25/2012 have no reasons to take a contrary stand when the subsequent notification and the nature of services provided by the appellant are the same.”

The tribunal also held that agreements executed by or on behalf of the government are exempt from stamp duty.

CESTAT further ruled that refunds under Sections 102 and 103 are governed by a special, self-contained mechanism and that unjust enrichment does not apply.

The appeal was allowed by way of remand, with directions to process the refund after impleading MES as a co-applicant.

For Appellant: Advocate Shagun Arora, Shri Kunal Aggarwal and Pratyush Pradhan

For Respondent: Advocate Jaya Kumari, Authorised Representative