2008 (9) TMI 272 - AT - Service Tax

Management, Maintenance or Repair Service - Applicants herein are builders/contractors constructing, developing residential and commercial complex and selling them collected amount for maintenance of immovable property applicant has contention on statutory obligation on maintenance of separate account under other statutory provisions this contention is to be considered only at the time of final hearing - issue in this case is a arguable one - applicants have not made out a prima facie case for complete waiver of the pre-deposit stay granted parlty

Summary

Issues:

1. Whether the activity of maintaining immovable property developed by the applicants falls under "Management, Maintenance or Repair Service" for service tax purposes.
2. Whether the applicants are required to pre-deposit the service tax amount confirmed by the adjudicating authority pending appeal.

Analysis:

Issue 1:
The case involved multiple applicants who were builders/contractors constructing residential and commercial complexes. The revenue authorities alleged that the applicants were charging maintenance charges from customers and not paying service tax on it. The lower authorities confirmed the service tax and imposed penalties, leading to the applicants seeking a waiver of the pre-deposit. The applicants argued that they were collecting amounts as a trustee under statutory obligations and not for services provided. They claimed the collected funds were used for various expenses and were eventually transferred to flat owners' societies. The revenue authorities contended that the activity fell under "Management, Maintenance or Repair Service" as the collected amounts were used for property maintenance. The Tribunal found the issue arguable and directed the applicants to deposit specific amounts within a deadline, indicating that a prima facie case for complete waiver was not made out.

Issue 2:
The Tribunal ordered the applicants to deposit specified amounts within a set timeframe. Upon compliance, the pre-deposit condition for the remaining amounts was waived, and recovery stayed until the appeal's disposal. This decision balanced the interests of both parties by ensuring a partial pre-deposit while allowing the appeal process to continue without immediate financial burden on the applicants. The Tribunal's approach aimed to maintain fairness and compliance with legal procedures in the adjudication of service tax disputes.