Statutory cylinder testing and inspection is not commercial maintenance or repair for service tax purposes.

Periodic testing and inspection of gas cylinders carried out under the Gas Cylinder Rules, 2004 and the Explosives Act was treated as a statutory compliance activity rather than commercial maintenance or repair. The record, as described, showed only periodic testing, inspection and upkeep performed for an oil corporation under a work order, and no material was produced to establish taxable repair or maintenance in a commercial sense. On that basis, the revenue was said to have failed to justify levy under maintenance and repair service, and the activity was concluded to be outside service tax; small scale exemption was also extended subject to verification.

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Issues: Whether periodic testing and inspection of gas cylinders carried out under the Gas Cylinder Rules, 2004 and the Explosives Act constituted taxable maintenance and repair service, or was a statutory obligation not exigible to service tax.

Analysis: The activity was undertaken pursuant to the statutory requirements governing cylinder testing and was performed for an oil corporation under a work order. No material was produced to show that the appellants were carrying out repair or maintenance of cylinders in a commercial sense. The record indicated only periodical testing, inspection and upkeep in compliance with the statutory regime, and the revenue had not established the basis for levy under the category of maintenance and repair. The appellate authority had also extended small scale exemption subject to verification.

Conclusion: The activity was not taxable as maintenance and repair service; the demand was unsustainable and the appeal succeeded.

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