2014 (6) TMI 693 - AT - Service Tax

Demand of service tax - Maintenance of garden - Maintenance of Raj Bhawan exempted from tax - Revenue contends that services have been rendered in respect of landscape and garden and not in respect to the road and Government buildings - Held that - 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 - 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. - matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Applicability of Sections 97 and 98 of the Finance Act to maintenance services provided by the appellants.
2. Validity of the order directing pre-deposit by the Commissioner (Appeals).
3. Consideration of important aspects by the appellate Commissioner before ordering pre-deposit.

Analysis:
1. The judgment dealt with the issue of whether the services provided by the appellants, involving maintenance of greenery on road dividers and gardens belonging to the government, are exempt under Sections 97 and 98 of the Finance Act. The appellants argued that services related to road maintenance are exempt under Section 97, and garden maintenance at the Raj Bhavan is exempt under Section 98. However, the adjudicating authority rejected this contention, leading to a confirmed demand and penalties under Sections 76, 77, and 78 of the Finance Act.

2. The appellants appealed to the Commissioner (Appeals), who directed them to pre-deposit the adjudicated tax amount along with interest. Non-compliance resulted in the dismissal of the appeal. The tribunal noted that the appellate Commissioner failed to consider Sections 97 and 98 while ordering the pre-deposit, which was a crucial aspect of the case.

3. After hearing the parties, the tribunal found that maintenance of road dividers falls under Section 97, and the garden at the Raj Bhavan is considered part of a Government building, making it exempt under Section 98. The tribunal held that the appellate Commissioner should have considered the applicability of these sections before ordering any pre-deposit. Consequently, the impugned orders of the Commissioner (Appeals) were set aside, and the case was remanded for a merit-based hearing without the need for pre-deposit. The stay application was also disposed of accordingly.