2013 (12) TMI 734 - AT - Service Tax

Waiver of pre-deposit of Service Tax demand - Penalty u/s 77 and 78 - Maintenance or Repair Service - Evasion and suppression of tax - Held that - applicants are providing the services in the nature of construction, repair, recondition or replace a portion of the highway system. It is admitted fact that the applicants are entered into a contract of maintenance and management of immovable property . Maintenance means to maintain the road in proper condition, therefore, the argument that the repairs does not covered under maintenance services is prima facie not tenable. As the applicants are entered into an agreement of maintenance or management of road/immovable property, therefore, the applicants have failed to make a prima facie case for complete waiver of pre-deposit - Conditional stay granted.

Summary

Issues:
1. Waiver of pre-deposit of Service Tax demand
2. Classification of services under Service Tax categories
3. Interpretation of maintenance or repair services

Analysis:
The judgment involves the issue of seeking waiver of pre-deposit of Service Tax demand amounting to Rs. 1,35,03,934/-, along with interest and penalties under Sections 77 and 78 of the Finance Act, 1994. The period in question is from 16-6-2005 to 31-3-2006, with a show-cause notice issued on 28-9-2005. The applicants were alleged to have evaded payment of Service Tax by suppressing the value of taxable service received during the mentioned period. The applicants argued that their services did not fall under the category of 'Maintenance or Repair Service' liable for Service Tax, contending that their services involved repairs, alterations, construction, improvements, and restoration of roads, distinct from maintenance or management of roads. They argued that their services were more appropriately covered under 'commercial or industrial construction services' or 'works contract services', which were excluded from the category of maintenance or repair services. The applicants cited various judgments to support their contention.

The Tribunal analyzed the nature of services provided by the applicants and found that they were engaged in construction, repair, reconditioning, or replacement of a portion of the highway system. The Tribunal noted that the applicants had entered into a contract for the maintenance and management of immovable property, specifically roads. The Tribunal observed that maintenance involves keeping the road in proper condition, indicating that repairs are included in maintenance services. Consequently, the Tribunal held that the argument that repairs were not covered under maintenance services was not tenable. As the applicants had entered into an agreement for maintenance or management of roads/immovable property, they failed to establish a prima facie case for a complete waiver of pre-deposit. The Tribunal directed the applicants to make a pre-deposit of Rs. 15 lakhs within four weeks and report compliance by a specified date. Upon compliance, the balance amount of Service Tax, interest, and penalties would be waived during the appeal's pendency.