2015 (8) TMI 33 - AT - Service Tax

CESTAT upholds service tax demand on contractor for maintenance services; remands for re-computation.

M/s Tarachand Chaudhary Versus CCE, Jaipur

M/s Tarachand Chaudhary Versus CCE, Jaipur - 2016 (42) S.T.R. 83 (Tri. - Del.) Issues:Service tax demand on management, maintenance, or repair services provided by the contractor for parks and road side plantation.Analysis:The appeal was filed against an order confirming a service tax demand of Rs. 74,72,718 on the appellant for providing management, maintenance, or repair services without paying service tax. The appellant, a contractor, had contracts with Jaipur Development Authority and Jaipur Nagar Nigam for various services related to parks and roadside plantation maintenance. The adjudicating authority upheld the demand from 1.5.2006 onwards, citing the scope falling under management, maintenance, or repair services as per the Finance Act, 1994.The appellant contended that the services provided did not fall under maintenance and repair of immovable property, there was no suppression of facts, and maintenance of parks was a statutory duty of the authorities. The Department argued that statutory duty did not exempt services from service tax, and the appellant's lack of cooperation justified invoking the extended period for demand.The CESTAT analyzed the definitions of maintenance or repair services before and after 1.5.2006. It noted a change in the definition to include maintenance or repair of properties, whether immovable or not, from that date. The judgment in a previous case was discussed, where it was held that maintenance of grass, plants, and trees did not fall under maintenance of immovable property. However, the CESTAT concluded that even non-immovable properties were included in the scope of management, maintenance, or repair services from 1.5.2006, justifying the demand.The appellant's failure to register for service tax, file returns, provide details, or cooperate in the investigation was deemed as suppression of facts. Despite this, the CESTAT directed a re-computation of the service tax liability considering the supply of goods involved in the services provided. The case was remanded for re-computation of the demand, considering the benefit of a specific notification regarding the supply of goods, and the appellant was granted an opportunity to establish eligibility for the notification's benefit. Penalties were to be re-computed accordingly, and the appeal was disposed of with these directions.