Landscaping & Garden Maintenance Taxable as ‘Management, Maintenance or Repair Service’: CESTAT upholds Service Tax Demand [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Chennai held that the service of landscaping and garden maintenance activities comes under “Management, Maintenance or Repair Service”, therefore attracts service tax.

In the case of M/s Trishaa Rose Garden Pvt Ltd., the tribunal upheld the service tax demand of ₹80.16 lakh (along with interest and penalties) for the period April 2008 to March 2013.

The appellant contended that its activities such as planting, nurturing, irrigation and horticultural operations amounted to horticulture/cultivation and not “maintenance”. Therefore, it submitted that they were not taxable prior to 01.07.2012.

The appellant’s counsel Adv. Raghav Rajeev further claimed that they were covered under agriculture/negative list. It was also argued that the contracts were composite in nature and, if at all taxable, should fall under works contract.

The Department contended that the scope of work included watering, trimming, pruning, mowing, weeding, pest control, replacement of plants and maintenance of lawns and parks, comes under the maintenance of property and was taxable under Section 65(64) read with Section 65(105)(zzg)of the Finance Act, 1994 (and as “service” post 01.07.2012).

The bench of Vasa Seshagiri Rao (Technical member) and P. Dinesha(Judicial member) held that the documentary record including contracts and invoices showed the appellant was engaged in periodic and continuous maintenance of existing gardens and parks, and not in one-time creation or development of new horticultural assets.

‘The definition of “management, maintenance or repair service” under Section 65(64) read with Section 65(105)(zzg), as amended w.e.f. 01.05.2006, is wide enough to cover maintenance of properties, whether movable or immovable. The services rendered by the appellant clearly satisfy this definition’ said the bench.

The meaning of horticulture in land laws cannot be mechanically imported into service tax law, said the appellate tribunal. It also added that the plea of works contract is also unsustainable as the contracts are service dominant.

Accordingly, the appellate tribunal held that the activities are correctly classifiable as taxable “management, maintenance or repair service”.

Mr. Sanjay Kakkar, Authorised Representative, appeared for the department.

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