Rate contract services before 16.6.2005 were prima facie outside maintenance and repair tax, with pre-deposit waived.

Services rendered under a rate contract were treated as prima facie outside maintenance and repair services for the period before 16.6.2005, because such contracts involved work assigned as and when required at agreed rates and not a maintenance contract. The definition was amended only from 16.6.2005 to include rate contract services, and the Tribunal relied on prior decisions and a Board circular supporting that position. On that basis, the issue was found prima facie in favour of the assessee and unconditional waiver of pre-deposit of the duty and penalty was granted.

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Issues: Whether services rendered under a rate contract, for the period prior to 16.6.2005, were prima facie taxable as maintenance and repair services and whether the assessee was entitled to unconditional waiver of pre-deposit.

Analysis: The contract was found to be a rate contract under which work was assigned as and when required at agreed rates. It was noted that, before 16.6.2005, services rendered under a rate contract were not treated as maintenance or repair services in the absence of a maintenance contract. The definition was amended only from 16.6.2005 to include rate contract services. The issue was also supported by Tribunal decisions and the Board circular relied on in the order.

Conclusion: The issue was held prima facie in favour of the assessee, and the condition of pre-deposit of the entire duty and penalty was waived unconditionally.

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