ST - Nature of work is clearly in nature of regular maintenance which may include replacement of certain items or provision of new items -services do not fall under CICS: CESTAT
By TIOL News Service
MUMBAI, AUG 23, 2017: AGAINST confirmation of demand of service tax on the services provided by them to various clients under the head "maintenance and repair service", the appellant is in appeal before the CESTAT.
The appellant argued that they are engaged in provision of 'Commercial and Industrial construction service' and not as contended by the lower authorities; that the benefit of Notification 1/2006-ST has been wrongly denied to them; that the appellant had entered into various rate contracts for activities with the service recipients and in the said rate contracts, specific items of work were defined; for each service, a separate rate was provided;that when the billing was done, the invoice was raised as per the work done and as per the rates prescribed in the rate contract with various service recipients; that the contracts were named as 'maintenance contract' but the individual items in the contract were in the nature of 'Commercial and Industrial construction service'; that repair, alteration, renovation or restoration or similar service in relation to commercial buildings and civil structures is covered under commercial or industrial construction vide clause (d) thereof. Reliance is placed on the decision in Kala Sagar vs. CST, Mumbai-II - 2013-TIOL-956-CESTAT-MUM.
The AR placed reliance on the Delhi Bench decision in appellant's own case - 2013-TIOL-838-CESTAT-DEL, wherein the appellant had accepted that the services would fall under the category of management, maintenance and repair service and accepted the liability.
After considering the rival submissions and extracting the definitions of 'Commercial or Industrial Construction service' and 'Management, Maintenance or Repair service', the Bench observed thus -
"4.1 A perusal of the contract provided by the appellant shows that the contract is titled as 'maintenance contract' and a list of items of work is specified therein against which rates for the same have been mentioned. The arrangement between the service provider and the service recipient is that, as and when an item of work is required to be done, the same would be done by the service provider and the payment would be made as per the rate prescribed in the rate contract. The nature of work is clearly in the nature of regular maintenance which may include replacement of certain items or provision of certain new items. It is possible that during maintenance, some structure needs to be removed and a new structure built thereon. It is seen that the rate contract prescribes rate for both kind of activities. Moreover, it is seen that a lot of works specified therein do not at all fall under construction of industrial complex service. Some examples of the same are:-
|
Sr. No.
|
Items
|
Rate (Rs.)
|
Unit
|
|
1
|
Excavation in soft soil (Lead upto 50 M)
|
114/-
|
M3
|
|
2
|
Excavation in Marcum upto 1.50 M
|
144/-
|
M3
|
|
3
|
Excavation in Murum 1.50 to 3.00 M
|
153/-
|
M3
|
|
4
|
Excavation in Murum 3 to 4.50 M
|
288/-
|
M3
|
|
5
|
Excavation in Murum Hard Rock upto 1.60 M manually (Lead 50 M)
|
669/-
|
M3
|
|
6
|
Excavation in Hard Rock below 1.6 M manually
|
774/-
|
M3
|
|
7
|
Back Filing by brought from outside material
|
192/-
|
M3
|
|
8
|
Back Filing by available murum at site
|
74/-
|
M3
|
|
9
|
P & Doing rubble soling 230 mm thick
|
72/-
|
M2
|
|
10
|
P & D laterite soiling by outside material
|
96/-
|
M2
|
|
11
|
Carting away debris material outside the company
|
108/-
|
M3
|
|
12
|
Levelling of Soil
|
33/-
|
M2
|
|
13
|
Excavation & Backfilling in Garden soil (30 cms wide & 30 cms depth)
|
65/-
|
RMT
|
|
14
|
P & D laterite soling by available material
|
294/-
|
M3
|
|
15
|
Removal of Top soil shrub etc.
|
11/-
|
M2
|
|
16
|
Debris shifting by Tractor including Loading
|
327/-
|
Trip
|
|
17
|
Debris shifting by Tough rider including loading
|
109/-
|
Trip
|
4.2 There are numerous such examples in the maintenance contract. In view of that, the classification under 'commercial and industrial construction service' has to be ruled out. In these circumstances, the claim of the appellant that the service is 'commercial and industrial construction' cannot be accepted. The service needs to be classified as 'management, maintenance and repair service'."
The appeal was dismissed.
(See 2017-TIOL-3048-CESTAT-MUM)
