MAINTENANCE AND REPAIR SERVICES
Date of Introduction : 01.07.2003 vide Notification No. 07/2003 dated
20.06.2003
Definitions :
(a) “maintenance or repair” means any service provided by
(i) any person under a maintenance contract or agreement; or
(ii) a manufacturer or any person authorized by him, in relation to maintenance
or repair or servicing of any goods or equipment, excluding motor vehicle;
(b) ‘motor vehicle’ has the meaning assigned to it in clause (28) of Section 2
of the Motor Vehicles Act, 1988 (59 of 1988);
(c) “Taxable service” means any service provided to any person / customer, by
any person in relation to maintenance or repair; and the term “service provider”
shall be construed accordingly.
Value of taxable service :
Value of taxable service shall be the gross amount charged by the service
provider of such service rendered by him. However, it does not inclu de the cost
of parts or other materials, if any, sold to the customer during the course of
providing maintenance or repair service.
Scope of Service :
Maintenance, repair or servicing done under a contract, or by a manufacturer or
any person authorized by him, of any goods or equipments, excluding motor
vehicles is chargeable to service tax.
Exemptions :
(i) Maintenance or repair done under contracts which were entered prior to 1st
July, 2003 are exempted for that part of the value of the service for which
bill/invoices were raised and the amount has actually been received prior to 1st
July, 2003 (Notification No. 11/2003-ST dated 20.06.2003). For all such
contracts, all subsequent payments or payments made against invoice issued
subsequent to 1st July, 2003 will be chargeable to service tax.
(ii) Maintenance or repair of computers, computer systems and computer
peripherals was exempted vide Notification No.20/2003 dated 21.08.2003. However
said exemption is withdrawn w.e.f. 09.07.2004 vide Notification No. 07/2004
dated 09.07.2004.
Board’s Clarifications :
(i) Circular No. 59/8/2003 dated 20.06.2003
Certain doubts have been raised in case of maintenance and repair services as to
whether service tax on maintenance and repair would be charged in case where
during the guarantee period, the services are provided to the buyer of the goods
while the payments for the same are received from the supplier of the goods. In
this regard it is clarified that irrespective of the fact that the receiver of
the service is different from the person making payments for such services, the
service tax is leviable on the services provided towards maintenance and repair.
Therefore, for the services provided during the warranty period by the dealer or
any other authorized person, service tax would also be leviable on any amount
received by such dealer or such other authorized person from manufacturer of
such goods.
(ii) Circular No.70/19/2003 dated 17.12.2003 ‘Maintenance or repair’ means any
service provided by
(i) any persons under a maintenance contract or agreement or (ii) a manufacturer
or any person authorized by him in relation to maintenance or repair or
servicing of any goods or equipment. In the case of Maintenance of Software
repair is not of tangible goods but that of intangible program/software which is
in installed condition and thus the maintenance and repair of software is not
maintenance and repair of ‘goods’. Further an exemption was granted to
maintenance or repair services in relation to computer, computer systems and
computer peripherals vide Notification No.20/2003-ST dated 21.08.2003. As such
computer software would form a part of computer system and thus maintenance of
software being a sub-set of maintenance of computer systems were covered under
this notification. Under the category of ‘consulting engineer’ vide Notification
No.4/99/-ST dated 28.02.99, taxable service provided to any person by a
consulting engineer in relation to computer software is exempted. The definition
of ‘Business Auxiliary Service’ also specifically provides that; inter alia,
maintaining of computer software is covered in the service, which is excluded
from the scope of business auxiliary service.
Taking the above into consideration, it is to clarify that maintenance of
software was not chargeable to Service Tax.
However exemption to Maintenance or repair of computer, computer systems or
peripherals is withdrawn vide Notification No.07/2004 dated 09.07.2004.
(iii) Circular No.74/4/2004-ST dated 23.01.2004
The machines like ATM perform independent functions using processed data.
Whereas principal function of computers is processing of data. Thus machines
like ATM having independent functions cannot be considered as computers.
Therefore maintenance or repair of such machines was not entitled for exemption
under Notification No. 20/2003.
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