Transformer repair contract outside service tax where no maintenance agreement existed for the relevant period

A transformer repair agreement was treated as a work contract because it provided repair rates and a guarantee for the repaired transformers. Before 16-06-2005, repair or servicing under a contract other than a maintenance contract was not covered by service tax, as reflected in the Board Circular dated 27-07-2005. In the absence of any maintenance contract, the demand was not sustainable and the repair activity was held outside service tax for the period in question. The Revenue's appeals were rejected.

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Issues: Whether the contract for repair of transformers was a maintenance and repair service exigible to service tax for the relevant period before 16-06-2005.

Analysis: The agreement was examined and found to be a work contract providing rates for repair of transformers and a guarantee for the repaired transformers. The Board Circular dated 27-07-2005 indicated that, before 16-06-2005, repair or servicing under a contract other than a maintenance contract or agreement was not covered by service tax. In the absence of any maintenance contract, the demand could not be sustained.

Conclusion: The contract was not taxable as maintenance and repair service for the period in question, and the Revenue's appeals were rejected.

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