2025-VIL-1017-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Sections 65(64)(ii)(b) of Finance Act, 1994 – Classification of Service – Appellants had entered into Power Station Maintenance Agreements with NTPC for provision of various services – In respect of works executed under Construction Services, Appellants paid service tax on 33% of value after availing abatement of 67% in terms of Notification 15/2004-ST – Department issued show cause notice proposing demand of short paid service tax – Adjudicating authority confirmed demand raised in show cause notice and imposed penalty under Section 78 of the Act – Whether Adjudicating authority is justified in classifying services under category of Management, Maintenance or Repair Service (MMRS) – HELD – As per Section 65(64)(ii)(b) of the Act, any service provided by any person under a contract in relation to maintenance or repair of properties, is required to be classified under Management, Maintenance or Repair Service – Letter of Awards (LOAs) given by NTPC to Appellant contains repair and maintenance part. The subject of LOAs is mentioned as Annual Maintenance contract for all types of civil works of all building and structure – Work undertaken by Appellant based on maintenance contract is nothing but repairs of buildings – Services as mentioned in LOAs are required to be classified under Management, Maintenance or Repair service and not under Construction service – Adjudicating authority has rightly classified above services under MMRS and accordingly, Appellants are not entitled for abatement as availed – In a case which involves issues related to classification, Appellant cannot be held responsible for interpreting same in such a way that it could be beneficial to them – Since there is no willful misstatement or suppression of facts involved, invocation of extended period or imposition of penalty under Section 78 is not sustainable - the appeal is partly allowed - Transportation activity – Demand of tax – Whether demand confirmed under category of Cleaning Services is sustainable – HELD – Appellant had undertaken activities of loading, transportation and unloading of mill rejects, ash, coal dust and cylinders in dump yard located within factory premises – Department has classified this service under ‘cleaning services’ – Activity of removing fly ash by mechanical means from ash pond to other area is not covered under cleaning activity services – In instant case, there is only transportation within factory premises – Above service is not cleaning activity, but only transportation within factory premises from one place to another and accordingly, is not taxable – Demand confirmed under category of Cleaning Services is set aside - Invocation of extended period of limitation – Imposition of penalty – Whether invocation of extended period of limitation is justified in facts and circumstances of case – HELD – Adjudicating Authority has not given any specific reason about invocation of provision under Section 73(1) of the Act – By merely claiming classification under a specific tariff heading, it cannot be said that there was any willful misstatement or suppression of facts – In a case which involves issues related to classification, Appellant cannot be held responsible for interpreting same in such a way that it could be beneficial to them – Since there is no willful misstatement or suppression of facts involved, invocation of extended period or imposition of penalty under Section 78 is not sustainable.
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