2013 (3) TMI 80 - AT - Service Tax

Service tax on Repair and maintenance of building - assessee contended that repairs/maintenance pertains to a property belonging to the Ministry of Defence and did not involve any commercial element, they were exempted - revenue contended that demand of service tax is under Repairs or Maintenance Service , the definition of which does not distinguish properties used for commerce or industry from those not put to such use. It is further submitted that the activity in question was undertaken by the appellant mostly on movable properties and therefore they cannot claim the benefit of the clarification of Ministry of Finance (MOF) referred to in para 12 of the Tribunal s Order in National Refrigeration case. Held that - appellant has not made out a prima facie case - pre deposit ordered partly.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery in respect of service tax demand.
2. Contesting the demand of service tax under "Maintenance or Repair Service" on grounds of exemption and limitation.
3. Lack of financial hardship plea in the stay application.

Analysis:

Issue 1 - Waiver of pre-deposit and stay of recovery:
The application filed sought waiver of pre-deposit and stay of recovery for a service tax demand of Rs. 32,53,769/- covering the period from July 2003 to March 2009, along with penalties imposed on the appellant. The demand pertained to maintenance/repairs on equipment at Naval Dockyard under agreements with the Military Engineering Service. The appellant argued for exemption from service tax under the definition of "Commercial or Industrial Construction Service," citing a previous order. The Additional Commissioner contested this, stating that the repairs/maintenance service tax demand does not distinguish between properties used for commerce/industry and others. The Tribunal directed the appellant to pre-deposit Rs. 8,00,000/- within six weeks, subject to which waiver and stay were granted on penalties and interest.

Issue 2 - Contesting demand under "Maintenance or Repair Service" on grounds of exemption and limitation:
The appellant contested the demand on the ground of limitation, arguing that the first show-cause notice was issued beyond the normal period due to alleged suppression of facts. The appellant denied the suppression allegation. The Tribunal noted that the appellant did not establish a prima facie case against the service tax demand. It highlighted the absence of the agreement with MES on record, making it unclear whether movable or immovable property was repaired/maintained. The MOF clarification cited by the appellant did not specifically address "Maintenance or Repair Service" under Section 65(64) of the Finance Act, 1994. While considering the limitation plea, the Tribunal directed the pre-deposit of Rs. 8,00,000/-.

Issue 3 - Lack of financial hardship plea in the stay application:
The appellant did not plead financial hardships in the stay application. The Tribunal, after evaluating the submissions, found multiple reasons to reject the appellant's case against the service tax demand. It emphasized the lack of clarity on the type of property repaired/maintained, the insufficiency of the MOF clarification, and the absence of commercial or industrial elements in the definition of "Maintenance or Repair Service." Despite considering the limitation plea, the Tribunal directed the appellant to pre-deposit Rs. 8,00,000/- within six weeks for waiver and stay on penalties and interest, without financial hardship being pleaded.