Maintenance and repair service tax before 16-6-2005 required a maintenance contract; mere work orders were insufficient.

For the period before 16-6-2005, maintenance or repair service under Section 65(64) of the Finance Act, 1994 attracted service tax only where the activity was carried out under a maintenance contract. On the facts, the assessees were acting under work orders and not a maintenance contract, so the levy did not apply. The Tribunal followed the earlier coordinate Bench view and held that the absence of a maintenance contract kept the activity outside the taxable category, with the demand unsustainable and consequential relief available to the assessee.

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Issues: Whether service tax was payable on maintenance and repair activity where no maintenance contract existed for the period prior to 16-6-2005.

Analysis: The appeal turned on the scope of the taxable category of maintenance or repair service under Section 65(64) of the Finance Act, 1994, as applicable before the amendment dated 16-6-2005. The decisive factual feature was that the appellants were not operating under a maintenance contract but only under work orders. The Tribunal followed the earlier coordinate Bench view that, for the pre-amendment period, a pure maintenance contract was necessary to attract service tax, and that the absence of such a contract took the activity outside the levy.

Conclusion: Service tax was not leviable on the appellants for the period prior to 16-6-2005 in the absence of a maintenance contract, and the demand could not be sustained.

Final Conclusion: The impugned order was set aside and the assessee obtained consequential relief.

Ratio Decidendi: For the period prior to 16-6-2005, maintenance or repair service attracted service tax only where the activity was undertaken under a maintenance contract, and a mere work order was insufficient to sustain the levy.

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