Whether laying of cables can be considered to be covered under “Repairs and Maintenance Services”?

PJ-Case law-2013/14-1603

Case:-COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BHOPAL VERSUS SANJEEV KUMAR JAIN-PROPRIETOR

Citation:-2013-TIOL- 833- CESTAT-DEL

Brief Facts:-The Respondent is registered with Jurisdictional Central Excise Authorities as a Service tax assessee since 06.09.2007. However, neither they were filing any Service Tax Return (ST-3 Return) nor they were paying Service Tax. A letter dtd. 20.01.2009 was issued to them by a Jurisdictional Superintendent Central Excise regarding non payment of service tax. In response to this the Respondent filed ST-3 Return for half yearly period ending March'08, September 2008 & March 2009 showing Nil amount of taxable value and nil Service Tax. Since the Respondent were acting as a Contractor for Bharat Sanchar Nigam Limited (BSNL), Panna, enquiry was made with BSNL about the nature of services being provided by the Respondent and payments made to them for the same. From the information furnished by BSNL, the Department was of the view that the Respondent were providing the service of repair and maintenance of under ground telecom cables for which they had received a total amount of Rs.64,13,964/- during period from Oct.'04 to March'09 and the service provided by them was taxable as repair and maintenance service. On the basis a Show Cause Notice dtd. 15.04.2010 was issued to the Respondent for demand of Service Tax amounting to Rs. 8,54,647/- along with interest and also for imposition of penalty on them under section 76,77 & 78 of Finance Act, 1994.

The Show Cause Notice was adjudicated by the Additional Commissioner Vide Order-in-Original dtd. 13.01.2012 by which the Additional Commissioner dropped the proceedings against the Respondent on the ground that from perusal of the documents produced by the Respondent it is clear that their activity is not repair and maintenance of cable but laying of under ground, which in terms of Board Circular No. 123/5/2010-TRU, dtd. 24.05.2010 is not taxable under any Clause of Section 65(105) of Finance Act, 1994. The Additional Commissioner also observed that Show Cause Notice is completely silent on the description, scope and details of work carried out by the Respondent and the same simply states that "from the details provided by M/s. BSNL, Panna it revealed that the Respondent has been providing repair and maintenance service to M/s BSNL", without disclosing the basis of such inference.

The above order was reviewed by the Commissioner by the way of filing a Review Appeal before the Commissioner (Appeals). However, Commissioner Appeals) vide order-in-appeal dtd. 13.05.2012, dismissed the appeal. The Commissioner (Appeals) also observed that on going through the details of the work orders for which the payments were made by BSNL. Panna, it is clear that the work performed by the Respondent is relating to laying of the cables and such activity, in terms of the Board's Circular dtd. 24.05.2010, is not taxable.

Against this order of the Commissioner (Appeals), this appeal filed by the Revenue and in respect of the Revenue's Appeal, the Respondent have filed a Cross-objection.

Appellant Contentions:- The Appellant submits that the respondent were engaged in repair and maintenance of the cables not laying of the cable and as such their activity was taxable as repair and maintenance services. He pleaded that from the perusal of work orders as mentioned in the grounds of appeal, it is clear that activity of the Respondent was repair and maintenance, not relating to laying of the cables.

Respondent Contentions:-None appeared for the Respondent. However there is a request for them for decision of this matter on merits.

Reasoning of Judgment:-We have considered the submissions from of the learned Departmental Representative and perused the record, we find that the Show Cause Notice, other than alleging that Respondents were providing the repair and maintenance services to BSNL, does not mention the details of the work being carried out. However, on perusal of the work order placed on record, it is clear that the service provided by the Respondent to BSNL is in relation of laying of the cables, are not repair and maintenance. Just because in the notice inviting tender, the name of the work is mentioned as "OFC route maintenance in Panna SSA", it can not be concluded that the tender was for inviting quotations for repair and maintenance of the cables as from a perusal of quotations, it is clear that the activity for which the tender had been invited was for laying of the cables and not repair and maintenance.

In view of this, we held that there is no infirmity in the impugned order. Revenue's appeal is dismissed. The Cross-objection also stands dispose of.

Decision:- Revenue appeal was rejected.

Comment:- The crux of this case is that merely by perusing the tender notice, and the description of work mentioned therein, it cannot be concluded that the work was “repair and maintenance work” when it was clear that the work was for laying of cables which is not taxable. It only indicates that due diligence is required while raising demand.

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PJ-Case law-2013/14-1603

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