The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that the commercial construction service not classifiable under management, maintenance or repair service’, and hence service tax is not leviable.
A Show Cause Notice was issued to the Appellant alleging that they are engaged in providing services namely Commercial or Industrial construction service, Maintenance & Repair and Cleaning Service and demanded service tax of Rs.30,73,331/- (including E.Cess & HSE.Cess) on the taxable value of Rs.2,42,85,907/-. The Additional Commissioner, confirmed service tax demand of Rs.29,45,657/- along with interest and penalty.
The appellant submitted that the work of “Fabrication” and “Erection” and “Replacement” cannot be classified under “Management, Maintenance or Repair Services”. The work of “Fabrication” amounts to “Manufacture” and that neither the activity of “Fabrication or Erection” nor the activity of “Replacement” could be classified under Management, Maintenance or Repair Service going by strict letter of Section 65(64) read with Section 65(105) (zzq).
The appellant further contended that the confirmation of demand in the impugned Order under the category of “Erection Commissioning or Instalment Service” is outside the scope of Show Cause Notice and hence not sustainable. The Order-In-Original is totally unreasoned as there is no finding on merit by the Additional Commissioner as to how the purported service provided by the Appellant is taxable under the category of “Commercial or Industrial Construction Services”, “Management, Maintenance or Repairs Services” and “Cleaning Services” as proposed in the Show Cause Notice.
A Two-Member Bench of the Tribunal comprising R. Muralidhar, Member (Judicial) and K. Anpazhakan, Member (Technical) observed that “Accordingly, we hold that the activity undertaken by the Appellant cannot be classified under the category of ‘ Management, maintenance or Repair service’ and hence the demand of service tax confirmed in the impugned order under the category of “Management, Maintenance or Repair Service, is not sustainable. Since the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise.”
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