2014 (6) TMI 94 - AT - Service Tax

Waiver of pre deposit - management, maintenance and repair service - non existence of written contract - period from 16-5-2005 to 31-3-2008 - Held that - for providing such service, the same must be provided under a contract. Admittedly, in the present case, there is no contract entered into by the appellant with Madhya Pradesh Government - The show cause notice for the period from 16-5-2005 to 31-3-2008 was issued on 10-11-2008 and as such the major part of the demand is beyond normal period of limitation. It is seen that the Commissioner, while confirming the demand, has not imposed any penalty on the appellant by holding that there was reasonable cause to entertain the belief that the service was non-taxable, by invoking the provisions of Section 80 of Finance Act, 1994. If there was reasonable cause for entertaining belief that the service provided by the appellant does not amount to taxable service, as held by the Commissioner, the same ground would be available to the appellant for pleading the limitation aspect. As such, at this prima facie stage, we are of the view that the appellant is not required to deposit any amount of duty as condition of hearing of their appeal. - Following decision of Ashoka Infraways (P.) Ltd. Versus Commissioner of Central Excise, Nashik 2011 (5) TMI 152 - CESTAT, Mumbai - Stay granted.

Summary

Issues:
1. Pre-deposit of service tax demand
2. Interpretation of "management, maintenance, and repair service"
3. Existence of a contract for service provision
4. Time-barred demand and imposition of penalty

Analysis:
1. The judgment concerns a case where a substantial service tax demand of Rs. 249,97,74,237 was confirmed against the appellant for providing taxable services under "management, maintenance, and repair service" without pre-deposit conditions. The demand was based on a show cause notice issued for the period from 16-5-2005 to 31-3-2008.

2. The appellant, a government company, argued that the maintenance and repair of roads were statutory obligations performed without a contract, thus not falling under the definition of taxable service. The definition of "management, maintenance, and repair service" under Section 64 of the Act requires services to be provided under a contract. As there was no contract between the appellant and the State of Madhya Pradesh, the Tribunal ruled in favor of an unconditional stay.

3. The Tribunal highlighted that the absence of a contract between the appellant and the state government was crucial in determining the applicability of service tax. Referring to previous Tribunal decisions granting unconditional stays under similar circumstances, the Tribunal concluded that the appellant was entitled to a stay without pre-deposit.

4. Additionally, the Tribunal noted that a significant portion of the demand was beyond the normal period of limitation, and no penalty was imposed on the appellant for reasonable cause to believe the service was non-taxable. In light of these factors, the Tribunal dispensed with the pre-deposit conditions and allowed the stay on recovery during the appeal's pendency, emphasizing the appellant's non-requirement to deposit any duty amount.

In summary, the judgment addressed issues related to the pre-deposit of service tax demand, the interpretation of "management, maintenance, and repair service" under a contract, the time-barred nature of the demand, and the imposition of penalties. The Tribunal ruled in favor of the appellant, granting an unconditional stay and dispensing with pre-deposit conditions based on the absence of a contract and the limitation aspect of the demand.