2026-VIL-1310-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Classification of horticultural, landscaping, beautification and developmental work – Appellant-Contractor executing work orders awarded by Government undertaking involving horticulture, landscaping, beautification, development of gardens, green belts, jungle clearance, road paving, footpaths and allied development works within plant premises - Whether above activities constitute Maintenance or Repair Service and benefit of Notification No. 12/2003-ST and 24/2009-ST is admissible - HELD - Activities undertaken by appellant are predominantly developmental, horticultural, landscaping and composite works and are not liable to Service Tax under Maintenance or Repair Service. Maintenance ordinarily presupposes preservation or upkeep of already existing asset whereas developmental activities resulting in creation or improvement of landscaping cannot automatically be treated as maintenance or repair. Horticulture and landscaping activities do not attract Service Tax under Maintenance or Repair Service as these are independent developmental or construction activities and not maintenance contracts - Many contracts are composite work contracts involving both material and labour and during relevant period artificial vivisection of composite contracts merely to levy Service Tax under Maintenance category was legally impermissible. Appellant is entitled to exclusion of value of materials sold under Notification No. 12/2003-ST subject to verification of documentary evidence - Substantial portion of contracts relate to roads and Notification No. 24/2009-ST exempted Maintenance or Repair of roads with retrospective exemption granted under Section 97 of Finance Act 2012. Service Tax cannot survive on road-related component and authorities below have not carried out proper segregation of taxable and exempt components - Extended period of limitation has been wrongly invoked as appellant was registered with Department, transactions were reflected in books of accounts and mere disagreement regarding classification does not establish wilful suppression or intent to evade tax - The demand of Service Tax, interest and penalties are set aside and the appeal is allowed
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