2019 (8) TMI 1704 - AT - Service Tax

Levy/non-levy of Service Tax - activities of repair and maintenance of buildings/ civil structures, belonging to the Ministry of Defense - period from July 2003 to March 2008 - HELD THAT - It is an admitted fact on record that during the disputed period from July 2003 to March 2008, the appellant had undertaken the activities of repair and maintenance of buildings/ civil structures, belonging to the Ministry of Defense. Such activities cannot be termed as commercial in nature, in order to be categorized as taxable service under MMRS. Further, Section 98 ibid mandates that no service tax shall be levied or collected in respect of MMRS provided for non-commercial buildings during the period from 16.06.2005 till the date, on which Section 66B was inserted in the service tax statute - Admittedly, in this case, the period of dispute is covered within the period prescribed under Section 98 ibid. Thus, the appellant should be entitled for the special provisions contained in Section 98 ibid for non levy of service tax on the services provided by it for the building/ civil structure of Ministry of Defense. The provisions of Section 98 ibid and their application to the facts of the present case have not been discussed by the learned Commissioner (Appeals) in the impugned order dated 17.08.2010, may be owing to the reason that the said provisions were incorporated in the statute book before passing of the impugned order - the matter must be remanded to the learned Commissioner (Appeals) to examine the said statutory provisions and thereafter to decide the appeal, with proper findings whether, the appellant should be entitled for the benefit contained in the said statutory provision - appeal allowed by way of remand.

Summary

Issues:
1. Applicability of service tax on repair and maintenance services provided to Ministry of Defense.
2. Interpretation of Section 98 of the Finance Act, 2012.
3. Proper application of statutory provisions by the Commissioner (Appeals).

Analysis:

Issue 1: Applicability of service tax on repair and maintenance services provided to Ministry of Defense
The appellant, a member of MES Builders Association of India, provided repair and maintenance services to Military Engineering Service (MES) under the Ministry of Defense. The appellant registered under the taxable category of "Management, Maintenance and Repair service (MMRS)" but later surrendered the registration certificate. The service tax department observed non-payment of service tax for services provided to MES, leading to show cause proceedings and subsequent confirmation of service tax demand, interest, and penalties. The Commissioner (Appeals) upheld the demands, prompting the appellant to appeal.

Issue 2: Interpretation of Section 98 of the Finance Act, 2012
The appellant argued that the repair and maintenance activities for MES were not commercial and thus not taxable under MMRS. Reference was made to Section 98 of the Finance Act, 2012, which exempts service tax on management, maintenance, or repair of non-commercial Government buildings. The appellant contended that the impugned order should be set aside based on this provision.

Issue 3: Proper application of statutory provisions by the Commissioner (Appeals)
The Tribunal noted that the repair and maintenance services provided by the appellant to Ministry of Defense were non-commercial in nature, falling outside the taxable scope of MMRS. Section 98 of the Finance Act, 2012, exempts service tax on such services for non-commercial buildings during the relevant period. The Tribunal found that the appellant should benefit from this provision. It was acknowledged that the Commissioner (Appeals) did not discuss the application of Section 98 in the impugned order, likely due to the provision being introduced after the order. Consequently, the Tribunal remanded the matter to the Commissioner (Appeals) for proper examination of the statutory provisions and a fresh decision based on the applicability of Section 98 to the case.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal for remand to the Commissioner (Appeals) for further consideration in light of Section 98 of the Finance Act, 2012.