Pure agent maintenance deposits by builders were not taxable as maintenance or repair service.

Amounts collected by builders from flat purchasers as one-time maintenance deposits, when kept in a separate account for statutory outgoings, common area upkeep and related payments until formation of the co-operative society, were not consideration for taxable maintenance or repair service. The governing state law required the promoter to hold and disburse the sums for the specified purposes and to meet outgoings until transfer. On those facts, the builders acted only as trustees or pure agents, paying municipal dues, utility charges and service-provider charges on a cost-to-cost basis without any service element of their own, so service tax was not leviable.

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Issues: Whether the amounts collected by the builders from flat purchasers as one-time maintenance deposit and applied towards outgoings, common area upkeep and related charges constituted taxable maintenance or repair service under the Finance Act, 1994.

Analysis: The amounts were collected and kept in a separate account to meet statutory outgoings and common charges till the co-operative society was formed. The governing state law required the promoter to maintain a separate account and disburse the sums for the purposes for which they were taken, and also placed responsibility on the promoter for payment of outgoings until transfer of the property. On the facts, the builders were not engaged in the business of providing maintenance or repair service or management of immovable property. They merely paid municipal dues, utility charges and payments to service providers on behalf of flat buyers on a cost-to-cost basis, acting as trustee or pure agent and without charging any service element of their own.

Conclusion: The amounts did not amount to consideration for taxable maintenance or repair service, and service tax was not leviable on them.

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