2009 (6) TMI 465 - AT - Service Tax

Horticulture & Landscaping Not Taxable under Service Tax Law

The Appellate Tribunal CESTAT, New Delhi, upheld the Commissioner (Appeals) order, ruling that activities related to the maintenance of green belt and ... Maintenance and repair service including maintenance or management of immovable property - horticulture and landscaping not constituting maintenance of immovable property - exclusion of standing timber, growing crops or grass from 'immovable property' - cleaning activity exclusion for agriculture and horticulture - incidental repair and construction works taxable but horticulture activities not - temporal application of amended definition from 16-6-2005 and subsequent widening from 1-5-2006Maintenance and repair service including maintenance or management of immovable property - horticulture and landscaping not constituting maintenance of immovable property - exclusion of standing timber, growing crops or grass from 'immovable property' - cleaning activity exclusion for agriculture and horticulture - Whether the respondents' horticulture and landscaping activities in the green belt fall within 'maintenance or management of immovable property' and are liable to service tax for the period 16-6-2005 to 28-2-2006. - HELD THAT: - The contract entrusted the respondents with horticulture and landscaping duties (mowing, pruning, planting, irrigation, nursery maintenance and related gardening operations), with incidental repair/maintenance of civil, mechanical and electrical fittings. The amended definition of 'maintenance and repair' effective 16-6-2005 includes maintenance or management of immovable property, but the Transfer of Property Act excludes standing timber, growing crops and grass from 'immovable property'. The definition of 'cleaning activity' expressly excludes services in relation to agriculture and horticulture. The Board circular addresses maintenance/construction of civil/electrical works in parks and green belts, not the horticultural activities of growing and maintaining plants, grass and trees. While incidental construction/repair works undertaken by the respondents were liable and the respondents paid tax on those, the core horticultural activities (growing, pruning, mowing, planting and related landscaping) do not fall within 'maintenance of immovable property' for the relevant period. Although the definition was widened from 1-5-2006 to include management, maintenance or repair of all properties, that amendment is temporally distinct and does not render the respondents' horticulture services taxable for 16-6-2005 to 28-2-2006. [Paras 5, 7, 8]Horticulture and landscaping activities undertaken by the respondents are not maintenance of immovable property and are not liable to service tax for the period 16-6-2005 to 28-2-2006; tax paid on incidental construction/repair works is not disturbed.Final Conclusion: The appeal is rejected; the Commissioner (Appeals) was right in holding that the respondents' horticulture and landscaping services did not attract service tax for the period 16-6-2005 to 28-2-2006, subject to taxation of incidental construction/repair work already taxed. The Appellate Tribunal CESTAT, New Delhi, consisting of P.K. Das and M. Veeraiyan, members, heard an appeal filed by the Revenue against an order by the Commissioner (Appeals) that activities related to the maintenance of green belt and garden are not subject to service tax under the Finance Act, 1994. The dispute centered around whether the maintenance activities performed by the respondents fell within the definition of 'maintenance of immovable property' as per section 65(64) of the Act. The Revenue argued that the activities carried out by the respondents were taxable services as per a Board's Circular and the amended definition of 'maintenance and repair' from 16-6-2005. The respondents contended that their activities focused on horticulture and landscaping, which did not constitute maintenance of immovable property. The Tribunal examined the scope of work outlined in the contract and found that the respondents were primarily engaged in horticulture activities such as growing plants, trees, and grass, which were not considered maintenance of immovable property. The Commissioner (Appeals) had correctly ruled that no tax was due on such activities during the relevant period. Consequently, the Tribunal rejected the Revenue's appeal and upheld the Commissioner's order.