2014 (12) TMI 916 - AT - Service Tax

Levy of service tax on management, maintenance or repair service prior to 1.6.2007 - activity are in the nature of works contract - Held that - Prima Facie it is incorrect to say that services rendered by them prior to 01.06.2007 will not be liable to service tax merely because they could be classified under works contract service with effect from 01.06.2007, because prior to 01.06.2007 the classification of their services will be as per the provisions existing then. As regards the main contention of the appellants that the services rendered to IIT Kanpur were not liable to service tax is view of the retrospective amendment referred to above, it is to submit that the said retrospective amendment is applicable only to non-commercial Government buildings. It is obvious that the buildings of IIT Kanpur are not Government buildings because IIT Kanpur is neither government nor any Department thereof. Obviously then the benefit of said retrospective amendment is not available to the appellants. While detailed analysis of all the facts and appellants contentions can be taken up only at the time of final hearing, it is seen that the appellant have not been able to make out a prima facie case to justify waiver of pre-deposit of service tax demanded and interest leviable thereon. - entire service tax directed to be deposited - however interest and penalty stayed - stay granted partly.

Summary

Issues:
Service tax demand upheld for management, maintenance or repair services provided to organizations like IIT Kanpur, Reserve Bank of India Kanpur, Power Grid Corporation Kanpur, and Hindustan Aeronautical Limited. Appellants claim services to IIT Kanpur not liable to service tax due to retrospective amendment and classification under works contract service pre-01.06.2007.

Analysis:
The appellants filed a stay application and appeal against the Order-In-Appeal upholding a service tax demand of Rs. 7,70,407 along with interest and penalties for services provided to various organizations. The original adjudicating authority confirmed a higher demand, but the Commissioner (Appeals) reduced it, upholding the demand only in relation to management, maintenance, or repair services provided to IIT Kanpur.

The appellants argued that services to IIT Kanpur should not be subject to service tax due to a retrospective amendment exempting management, maintenance, or repair of non-commercial Government buildings until a specific date. They also claimed that services under composite contracts involving goods supply should be treated as works contract service only from 01.06.2007, making pre-2007 services not liable to service tax.

The Tribunal considered the contentions and found it incorrect to assume that services rendered before 01.06.2007 would not be liable to service tax just because they could be classified as works contract service post-01.06.2007. Regarding the exemption claimed for services to IIT Kanpur under the retrospective amendment, the Tribunal clarified that the benefit applied only to non-commercial Government buildings, which did not include IIT Kanpur as it is not a government entity. Therefore, the retrospective amendment did not apply to the appellants' services.

The Tribunal noted that a detailed analysis of all facts and contentions would be done during the final hearing but found that the appellants failed to establish a prima facie case justifying the waiver of pre-deposit of the demanded service tax and interest. As a result, the Tribunal ordered the pre-deposit of the service tax and proportionate interest within four weeks, with compliance due by a specified date. However, further interest and penalties were waived, and recovery stayed during the appeal's pendency upon compliance.