By TIOL News Service

MUMBAI, MAY 16, 2014: THE appellants are engaged in providing services of maintenance of greenery on road divider as well as maintenance of road, Landscape and gardens, which is part of the Raj Bhavan and belongs to the government of Maharashtra. The activity of maintenance involves cutting of trees in shape, trimming of lawn, watering and cleaning of the weeds.

The jurisdictional Central Excise authorities at Nagpur want Service Tax of Rs.1,45,976/- on the aforesaid activity. Before the adjudicating authority the appellant submitted that services provided in respect of roads are exempted under Section 97. So also, maintenance of garden at Raj Bhavan is exempted under Section 98 of the Finance Act. Both these contentions were rejected on the round that the services have been rendered in respect of landscape and garden and not in respect of road and Government buildings and accordingly the demand was confirmed and penalty imposed under Sections 76, 77 & 78 of the Finance Act.

As the Commissioner(A) dismissed their appeal for non-compliance of the pre-deposit order, the appellant is before the CESTAT.

The Bench observed -

"5. Upon hearing the parties, it appears that the services in relation to the maintenance of road divider is covered under the provisions of Section 97 of the Finance Act, and the garden which is part of the Raj Bhavan forms part of the Government building. Accordingly, this maintenance service is exempt under Section 98 of the Finance Act. It is vehemently argued by the appellant that the appellate Commissioner have failed to consider the case under Sections 97 & 98 and ordered pre-deposit without considering the important aspect in this case."

Holding that in the interest of justice the appellate Commissioner should have considered the applicability of the sections 97 & 98 before passing any order for pre-deposit as the same goes to the root of the matter, the order was set aside and the Commissioner (A) was directed to hear the appeal on merit without any pre-deposit.

The appeal was allowed by way of remand.

In passing: While communicating the changes in Service Tax by the Union Budget, the Board vide D.O.F. No 334/1/2012-TRU Dated: March 16, 2012, under the head "C.4. Retrospective changes", informed -

21. Repair of roads has been exempted from service tax by Notification 24/2009-ST dated 27th July, 2009. By section 97, exemption relating to roads is extended for the earlier period commencing from June 16, 2005;

22. Service tax exemption has also been granted with retrospective effect (by section 98) on management, maintenance or repair service in relation to non-commercial Government buildings from 16th June, 2005 till the coming into force of the negative list when such repair will be exempted by the new mega notification.

(See 2014-TIOL-782-CESTAT-MUM)