2010 (1) TMI 511 - HC - Service Tax

Penalty and interest - horticulture and landscaping contract - demand of tax - under the category of maintenance or repair service - Maintenance and Repair means, any service provided in relation to maintenance or management of immovable property - respondents are cultivating as well as landscaping the CFCL garden and the works of repair and maintenance of civil/mechanical and electrical are incidental thereto - paid tax in such incidental works - the respondents have not done any civil/electrical or mechanical work in relation to maintenance of park or green belt Held that - appeal being devoid of merit is dismissed.

Summary

Issues:
1. Tax liability on horticulture and landscaping activities under the category of maintenance or repair service.

Analysis:
The case involved a dispute regarding the tax liability on horticulture and landscaping activities carried out by the respondent under a contract of Enrolment of green belt maintenance. The appellant contended that the activities were taxable under the category of maintenance or repair service as per the TRU Circular dated 27-7-2005 and section 65 of the Finance Act, 1994. The appellant argued that activities such as grass maintenance, landscaping, and plant care fell within the scope of maintenance of immovable property. However, the respondent, supported by the Commissioner (Appeals), argued that horticulture and landscaping activities did not constitute maintenance of immovable property. The Tribunal observed that the activities of growing grass, plants, and trees, along with maintenance of civil/mechanical and electrical fixtures, were incidental to horticulture and landscaping. The Commissioner (Appeals) noted that the respondents did not perform civil/electrical or mechanical work related to the maintenance of the park or green belt. The Tribunal further highlighted that services related to agriculture, horticulture, animal husbandry, or dairy were excluded from the definition of "cleaning activity," indicating that horticulture activities were separate from cleaning activity.

The Tribunal's analysis focused on the definition of "maintenance and repair service" under section 65 of the Finance Act, emphasizing that the activities of growing grass, plants, trees, fruits, and vegetables, along with lawn maintenance and shrub trimming, did not fall under the ambit of "maintenance of immovable property." The Tribunal also considered the exclusion of horticulture activities from the definition of "cleaning activity" as per section 65(24b) of the Act. Additionally, the Tribunal highlighted that immovable property did not include standing timber, growing crops, or grass as per the Transfer of Property Act, 1982. The Tribunal noted that the respondents had paid tax on construction works and park maintenance but correctly held that no tax was liable on horticulture and landscaping activities during the relevant period.

The appellant's counsel failed to persuade the court to adopt a different view from that of the Tribunal. Consequently, the High Court dismissed the appeal, ruling that it lacked merit based on the findings and analysis presented by the Tribunal and the Commissioner (Appeals).