Repair services under a rate contract were not taxable as maintenance and repair service before the levy expanded.

Repair services performed under a rate contract for transformers were treated as outside the scope of maintenance and repair service for the period before 16.6.2005, because earlier Tribunal rulings held that the levy had not then expanded to cover such activity. A Board circular stating that such services were not taxable before that date was treated as binding on the Revenue. The contrary departmental precedent was distinguished as involving different activity and an undisclosed period, so the demand and penalty could not be sustained.

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Issues: Whether repair services performed under a rate contract for the period prior to 16.6.2005 were liable to service tax as maintenance and repair service.

Analysis: The services were rendered under a rate contract for repair of transformers, and the relevant period was prior to 16.6.2005. The issue was treated as covered by earlier Tribunal decisions holding that such repair activity under a rate contract was not within the scope of maintenance and repair service for the period before the statutory expansion of the levy. The Board circular clarifying that such services were not taxable prior to 16.6.2005 was also treated as binding on the Revenue. The decision relied on by the department was distinguished as relating to different activity and an undisclosed period.

Conclusion: The repair services under the rate contract were not taxable as maintenance and repair service for the period in question, and the demand and penalty could not be sustained.

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