2019 (3) TMI 1435 - AT - Service Tax

Classification of services - Management, Maintenance and Repair Services or not - Respondent were undertaking activity of Plantation of trees, shrubs etc, Horticulture cleaning daily of garden and removal foe laves and unwanted vegetation, application of farm yard manure, application of fertilizers, edging of lawn, flower beds and weeding regularly, plant protection by using suitable insecticides and pesticides, pruning of trees when required - period involved is before 01.07.2012 and post 01.07.2012. Held that - The definition of management, maintenance or repair Services nowhere leads to the inference that the activity of the Respondent falls under the above description of service. The property involve should either be movable or immovable property. Section 3 of the Transfer of Property Act, 1882 defines immovable property which says that immovable property does not include standing timber, growing crops and grass. Admittedly the activity of the appellant does not fall under the above category and the nature of activity as given supra is very much different - there is no reason to classify the activity under the impugned heading. The term agriculture is of wide compass and it covers horticulture which in turn cover the gardening also. In case of Puran Singh M Verma Vs. CIT the Hon ble Gujarat High Court while interpreting the term agriculture income has held that if the basic operation such as cultivation of land weeding, watering, manuring etc are undertaken, the same would qualify under the term agriculture . In our view looking to the nature of activity performed by Respondent as described above since they have undertaken such operations hence their activity would fall under the definition of Horticulture . Thus, such activities undertaken by the Respondent would not fall under the definition of 'management, maintenance or repair service' - the activity undertaken by the Respondent since falling under the definition of 'Horticulture' which is part of agricultural activity only and not liable for any service tax - demand set aside - appeal dismissed - decided against Revenue.

Issues Involved:
1. Classification of services provided by the respondent.
2. Applicability of service tax before and after 01.07.2012.
3. Interpretation of "Management, Maintenance and Repair Services" vs. "Agriculture" and "Horticulture".
4. Applicability of the Negative List under Section 66D (d) of the Finance Act, 1994.
5. Reliance on previous tribunal and court judgments.
6. Invocation of extended period for demand and mens rea.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Respondent:
The respondent was engaged in maintenance of gardens, including activities such as lawn care, hedge trimming, and application of fertilizers. The revenue argued that these services should be classified under "Management, Maintenance and Repair Services" as they pertain to immovable property. However, the respondent contended that these activities fall under "Horticulture" and should be considered as agricultural services.

2. Applicability of Service Tax Before and After 01.07.2012:
For the period prior to 01.07.2012, the adjudicating authority dropped the demands, concluding that the services did not fall under "Management, Maintenance and Repair Services". Post 01.07.2012, the Commissioner (Appeals) held that these services were agricultural activities and thus exempt from service tax under the Negative List.

3. Interpretation of "Management, Maintenance and Repair Services" vs. "Agriculture" and "Horticulture":
The definition of "Management, Maintenance and Repair Services" under Section 65 (64) of the Finance Act, 1994, includes services related to the maintenance of properties. However, the tribunal found that the respondent's activities, such as planting trees and applying fertilizers, did not fit this definition. Instead, these activities were classified as "Horticulture", which is considered a part of "Agriculture".

4. Applicability of the Negative List under Section 66D (d) of the Finance Act, 1994:
Section 66D (d) exempts services related to agriculture, including horticultural activities. The tribunal referenced various dictionary definitions and legal precedents to establish that horticulture, which includes garden maintenance, is part of agriculture. Therefore, the services provided by the respondent fall under the Negative List and are exempt from service tax post 01.07.2012.

5. Reliance on Previous Tribunal and Court Judgments:
The revenue cited several tribunal decisions where services similar to those provided by the respondent were taxed. However, the tribunal found these cases distinguishable as they involved public park maintenance and roadside plantations, whereas the respondent's services were for private industrial areas. The tribunal also referenced judgments that supported the inclusion of horticulture within agriculture.

6. Invocation of Extended Period for Demand and Mens Rea:
The revenue argued that the respondent had suppressed facts, justifying the invocation of an extended period for demand. However, the tribunal found no evidence of deliberate intent to evade tax. Given the interpretative nature of the issue and the respondent's reliance on favorable tribunal judgments and CBEC guidelines, the tribunal ruled that the extended period was not applicable.

Conclusion:
The tribunal concluded that the respondent's activities fall under horticulture, which is part of agriculture, and thus exempt from service tax. The appeal filed by the revenue was dismissed, and the impugned order was upheld. The tribunal also noted that the demands raised by invoking the extended period were not sustainable due to the interpretative nature of the issue and lack of evidence for deliberate tax evasion.

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