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Case Law on Management, Maintenance and Repair Service

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Service Tax - Management, Maintenance or Repair Service - service tax liability on amounts which are collected as maintenance charges for maintenance of common facilities of the apartment or premises – revenue in appeal against CESTAT order holding that the assessee was not providing Management, Maintenance or Repair Service by collecting amount from prospective flat buyers, for maintaining the building, in the guise of deposits which is not returnable.

HELD - The arguments of the Revenue fail to take note of obligations and duties under the MOFA Act, 1963 - The definition in the Finance Act, pure and simple, alone has been looked at for the purpose of advancing the argument. The backdrop in which the promoter comes on the scene is totally lost sight of and that is precisely noted by the Tribunal - The deposit or the monies themselves are held and appropriated towards payment of taxes, etc., popularly known as outgoings. The building and the Flats therein has to stand intact till all the Flats or units are sold and the statutory obligations are fully discharged. This is not a service of the nature understood by Section 65 (64) of the Finance Act, 1994. It is not a contractor simplicitor of maintenance of immovable property. It is not as if there is a existing building comprising of Flats, fully occupied, the maintenance and upkeep of which is handed over under a contract. It is a statutory obligation superimposed on a contract to sell a Flat/unit in a building to be constructed on a piece or parcel of land. That cannot be confused with a taxable service as defined under the Finance Act, 1994 – answered in favour of the assessee and against the Revenue

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