Commissioner of Central Excise vs ANS Construction Ltd.

This Excise Appeal has been referred against the order dated 25-6-2009 passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi, whereby the appeal of the appellant against the order of the Commissioner (Appeals) has been dismissed.

Brief facts are that the respondent entered into a contract of Enrolment of green belt maintenance with M/s. Chambal Fertilizers and Chemicals Ltd. (CFCL). The scope of the contract was, horticulture and landscaping. By virtue of show-cause notice dated 8-5-2006, proposed demand of tax was made for a sum of Rs. 21,72,600 pertaining to the period 16-6-2005 to 28-6-2006 under the category of maintenance or repair service. Imposition of penalty along with interest was also proposed. The Original Authority affirmed the demand of tax and imposed penalty along with interest. The Commissioner (Appeals) set aside the order of the Original Authority. The order passed by the Commissioner (Appeals) has been maintained by the Customs Excise & Service Tax Appellate Tribunal, New Delhi by the impugned order, upholding the findings of the learned Commissioner that no tax is liable on such activity. This appeal has been preferred on the ground that the findings of the Commissioner (Appeals) and the Tribunal being contrary to law.

Heard learned Counsel for the appellant and the Caveator Mr. Sameer Jain, representing the respondent assessee.

Mr. Anil Mehta, learned Counsel for the appellant has submitted that in terms of Clause (64) of Section 65 of the Finance Act, 1994 as amended on 16-6-2005 the service of "Maintenance and Repair" means, any service provided in relation to maintenance or management of immovable property and that by application of the TRU Circular dated 27-7-2005 the activities carried out by the respondent are taxable as it consist of horticulture and landscaping including maintenance and construction service. He has also submitted that grass, light land maintenance of plant in the garden and park comes under the scope of maintenance of immovable property.

In rebuttal, learned Counsel for the respondent Caveator has supported the findings of the Commissioner (Appeals), submitting that horticulture and landscaping activities do not come within the ambit of immovable property. The respondent has already paid tax for the construction and cleaning of underground/opening ground water channel and repair and maintenance of civil, mechanical and electric fixtures in the green belt. His submission is that cleaning activity has been defined u/s 65(24b) of the Finance Act which includes service in relation to agriculture and horticulture. The dispute raised by the parties is with regard to the interpretation of the horticulture and landscaping and cleaning activity in terms of Clause (64) of Section 65 of the Finance Act. The definition of "maintenance or repair service" is as under:

''Maintenance and repair'' means any service provided by:

(i) any person under a contract or agreement; or

(ii) a manufacturer or any person authorized by him, in relation to:

(a) maintenance or repair including recondition or restoration, or servicing of any goods or equipment, excluding motor vehicle; or

(b) maintenance or management of immovable property.

The Tribunal has observed in the course of the order as under:

It is seen that the 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. It is contended by the learned Advocate that the respondent paid tax in such incidental works. The main contention of the respondent is that the activity of the horticulture which deals with growing of grass, flowering and plant are not act of maintenance of immovable property. The original authority observed that the maintenance of plant, grass, walkways and other fixtures is only maintenance of park and garden, would come under the maintenance of immovable property. The Commissioner (Appeals) observed that the respondents have not done any civil/electrical or mechanical work in relation to maintenance of park or green belt. Board Circular dated 27-7-2005 refers to maintenance of civil/electrical and construction work of park and green belt and not maintenance of grass, plants, trees or shrubs. There is no dispute that the respondents paid the tax on construction work and park. It is seen that services in relation to agriculture, horticulture, animal husbandry or dairy were excluded from the definition of "cleaning activity" u/s 65(24b) of the Act. So, the horticulture activity is outside of "cleaning activity" a separate activity. As per Section 3 of Transfer of Property Act, 1882 immovable property does not include the standing timber, growing crops or grass. It is noticed that by amendment of Section 65(64) with effect from 1-5-2006, service tax is leviable on maintenance of all properties (whether immovable or not). The respondents were engaged for activities of growing of grass, plants, trees or fruits, vegetable, regular mowing of lawns, pruning and trimming of shrubs and cleaning of garden, would not come within the ambit of "maintenance of immovable property". We have noted that respondents paid tax on the construction of walkways and other incidental works in the garden. Therefore, the Commissioner (Appeals) rightly held that no tax is liable on such activity during the relevant period.

Learned Counsel for the appellant could not convince us to take a different view to that what has been taken by the Tribunal.

In view of the above, the appeal being devoid of merit is dismissed.