By TIOL News Service

NEW DELHI, JULY 15, 2015: THE appellant, a contractor, entered into contracts with Jaipur Development Authority (JDA) and Jaipur Nagar Nigam (JNN) for management and maintenance of parks and roadside plantations.

The scope of work was:

(a) Supply & growing of plants;

(b) Supply and providing fertilizers and pesticides to the plants at regular interval;

(c) Watering of lawns, plants;

(d) Lawn cutting and pruning and trimming of hedges;

(e) De-weeding of lawns and flower beds;

(f) Preparation of flowerbeds and planting of shrubs etc.;

(g) Removing of stone pieces from other than lawn area in a park;

(h) Brooming the lawn and collecting the dirt at destined places;

(i) Operating the water pump;

(j) Putting on the lights and shutting them off;

(k) Operating the fountains;

(l) Providing round the clock security of the parks;

(m) Coloring the ports; potting and re-potting;

(n) Filling up new pots and planting plants therein;

(o) Replacement of dead plants.

The department wanted the contractor to pay Service Tax on the consideration received.

The adjudicating authority concluded that in view of the CESTAT judgment in the case of ANS Constructions Ltd. - 2009-TIOL-1459-CESTAT-DEL [Held - "respondents were engaged for activities of growing grass, plants, trees or fruits, vegetable, regular mowing of laws, pruning and trimming of shrubs end cleaning of garden, would not come within the ambit of "maintenance of immovable property"] the demand for the period up to 30.4.2006 was not sustainable but demand for period with effect from 1.5.2006 onwards was upheld on the ground that the service rendered fell under the scope of Management, Maintenance or Repair service as "management, maintenance or repair" of all properties (whether immovable or not) is included.

Before the CESTAT, the appellant submitted that there was no suppression involved and so the demand is hit by limitation and that Maintenance of parks is a statutory duty of JDA/JNN and, therefore, the said activity is not liable to service tax.

The AR emphasized that merely because maintenance of parks etc. was statutory duty of JNN/JDA, it in no way meant that the service is not be liable to service tax. In the matter of limitation, the Bench was informed that the appellant did not cooperate during investigation, did not respond to summons, did not submit any details (in spite of being asked) & the same had to be obtained from JDA/JNN and also did not file ST-3 returns showing rendition of the impugned service.

The Bench reproduced the definition of "Maintenance or Repair Service" as existing upto 30.04.2006 &after rechristening of the said taxable service as "Management, Maintenance or Repair Service" w.e.f 01.05.2006 and observed -

On Merits:

++ While we find it hard to discern any ratio in the said judgement (of ANS Constructions Ltd.), the adjudicating authority has dropped the demand pertaining to the period up to 30.4.2006 on the ground that during that period maintenance or repair of only immovable property was liable to service tax.

++ While there can hardly be any doubt that "roads, airports, railway, building, parks, electrical installation and the like" are clearly immovable properties and therefore management maintenance or repair of such properties is clearly liable to service tax, even if it is contended, as indeed has been done by the appellant, that maintenance of trees, grass etc. cannot be called in the category of maintenance of immovable property, the impugned demand would be sustainable even in the wake of such contention as maintenance or repair of even non-immovable properties was brought under the scope of management, maintenance or repair service with effect from 1.5.2006. Thus the said judgement in the case of ANS Construction does not come in the way of charging service tax on the impugned service w.e.f. 1.5.2006 as has rightly been held by the adjudicating authority.

On Limitation:

++ It is seen that the appellant did not take Service Tax registration and did not file ST-3 returns pertaining to the impugned service. It also did not submit the details in spite of being asked and did not even respond to summons. The required details had to be gathered from JNN/JDA. Thus, the appellant is clearly guilty of suppression of facts.

Held:

+ The impugned service is liable to service tax under management, maintenance or repair service and the appellant is guilty of suppression of facts.

+ The benefit of Notification 12/2003-ST is held admissible to the appellant subject to they satisfying the conditions mentioned therein.

The case was remanded.

In passing: Now, for the Revenue appeal…and the possibility of ROM…Commissioner(A)…

(See 2015-TIOL-1427-CESTAT-DEL)