2017 (8) TMI 438 - AT - Service Tax

Maintenance and repair service - repair, alteration, renovation or restoration or similar service in relation to commercial buildings and civil structures - if the service provided by the appellant is in the nature of management, maintenance and repair service or commercial and industrial construction service? - Benefit of N/N. 1/2006-ST - Held that - A perusal of the contract provided by the appellant shows that the contract is titled as maintenance contract and a list of items of work is specified therein against which rates for the same have been mentioned. The arrangement between the service provider and the service recipient is that, as and when an item of work is required to be done, the same would be done by the service provider and the payment would be made as per the rate prescribed in the rate contract. The nature of work is clearly in the nature of regular maintenance which may include replacement of certain items or provision of certain new items - the classification under commercial and industrial construction service has to be ruled out. In these circumstances, the claim of the appellant that the service is commercial and industrial construction cannot be accepted - appeal dismissed - decided against appellant.

Summary

Issues:
Classification of services provided by the appellant as maintenance and repair service or commercial and industrial construction service.

Analysis:
The appellant, M/s. Vascon Engineers Ltd., appealed against the demand of service tax on services provided to clients under maintenance and repair service. The appellant argued that they are engaged in commercial and industrial construction service, not maintenance and repair service. They claimed that the benefit of Notification 1/2006-ST had been wrongly denied to them. The appellant had rate contracts with clients specifying work items and rates for each service provided. The appellant contended that each item in the rate contract was in the nature of construction service, citing a Tribunal decision for support.

The Appellate Tribunal examined the submissions and the definitions of commercial or industrial construction service and management, maintenance, or repair service. The contract provided by the appellant was titled as a maintenance contract, listing various work items with specified rates. The Tribunal observed that the nature of work in the contract was primarily maintenance, including activities like excavation, backfilling, and debris removal, which did not fall under commercial or industrial construction service. The Tribunal noted that the contract contained numerous examples of maintenance work, leading to the conclusion that the services provided were more aligned with management, maintenance, and repair service.

The Tribunal rejected the appellant's claim that their services should be classified as commercial and industrial construction service. Consequently, the appeal was dismissed, affirming the classification of the services as management, maintenance, and repair service. The judgment was pronounced on 27.7.2017 by the Tribunal.