Service Tax: Landscaping, Garden Maintenance Contracts Taxable As Maintenance Services: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that landscaping and garden maintenance services provided under recurring maintenance contracts are classifiable as taxable “management, maintenance or repair services” and are liable to service tax.

Dealing with a dispute over the classification of services provided by a plant nursery engaged in maintaining gardens and parks for municipal authorities and corporate entities, the tribunal noted that service tax was leviable on specified taxable services during the relevant period.

"We find that Service tax was leviable on specified taxable services. Landscaping and garden maintenance were squarely covered under “management, maintenance or repair service", it said.

A bench of Judicial Member P Dinesha and Technical Member Vasa Seshagiri Rao, after further examining the present case held,

"The definition of “management, maintenance or repair service” under Section 65(64) read with Section 65(105)(zzg), as amended w.e.f. 01.05.2006, is wide enough to cover maintenance of properties, whether movable or immovable. The services rendered by the appellant clearly satisfy this definition"

The tribunal observed that “the contracts and invoices on record unmistakably show that the appellant was entrusted with upkeep, preservation and periodic maintenance of existing gardens and parks, and not with one-time development or creation of new horticultural assets.”

The ruling came in an appeal filed by Trishaa Rose Garden Pvt. Ltd., which operates a plant nursery and provides landscaping, horticultural operations and maintenance of gardens, parks and lawns for municipal authorities and corporate entities.

The dispute arose after the Commissioner of Central Excise and Service Tax, Coimbatore, issued a show cause notice alleging that the activities were taxable as “management, maintenance, or repair services” under Section 65(64) read with Section 65(105)(zzg) of the Finance Act, 1994 for the period prior to July 1, 2012, and as taxable services under the post-2012 “negative list” regime defined in Section 65B(44) and made chargeable under Section 66B thereafter.

The nursery argued that its activities amounted to horticulture involving cultivation and development of gardens, and not mere maintenance, and that horticulture was not a taxable service prior to July 1, 2012. It also claimed that the sale of plants, manure, soil, milk, and dairy products was a pure sale of goods and not liable to service tax.

Rejecting these submissions, the tribunal held that the contracts and invoices showed that the appellant was entrusted with upkeep and periodic maintenance of existing gardens and parks. It clarified that “the meaning of horticulture in land laws cannot be mechanically imported into service tax law.”

It further stated that the services were correctly classifiable as taxable management, maintenance, or repair services.

The tribunal rejected the claim of SEZ exemption for want of proof of authorised operations; however, it allowed exclusion of the value of pure standalone sales of goods from the taxable demand. The appeal was partly allowed to that limited extent.

For Appellant: Raghav Rajeev

For Respondent: Sanjay Kakkar