Composite service classification turns on dominant character; plant operation was held not taxable as maintenance or repair.

A composite contract for operating plant and systems was classified by its dominant and essential character, not by incidental tasks attached to performance. The respondent was engaged principally to operate plant for a fixed monthly consideration, while monitoring, running maintenance, de-choking, cleaning, tightening, dosing chemicals, and similar plant-room activities were only ancillary. On that basis, the service was treated as operation of plant and not as Management, Maintenance or Repair service. The appeal therefore failed and the order dropping the demand was upheld.

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Issues: Whether the respondent's activity of operating plant and connected incidental functions was classifiable as Management, Maintenance or Repair service, or whether it was a composite service whose dominant character was operation of plant and therefore not taxable under that head.

Analysis: The contracts showed that the respondent was engaged principally to operate plants and systems for ONGC for a fixed monthly consideration. The incidental activities such as monitoring, running maintenance during operation, de-choking, cleaning, tightening, dosing of chemicals, and related plant-room tasks were found to be only ancillary to the main function of operation of plant. A composite service must be classified by its essential character, and the dominant element of the transaction governs classification. On that basis, the service was treated as operation of plant and not as a separate Management, Maintenance or Repair service.

Conclusion: The activity was not classifiable under Management, Maintenance or Repair service; the respondent's service was held to be predominantly operation of plant with only ancillary elements.

Final Conclusion: The appeal failed and the order dropping the demand was upheld.

Ratio Decidendi: A composite service is classified according to its dominant or essential character, and incidental or ancillary activities do not change the classification of the main service.

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