TaxTMI 
TaxTMI 
2011 (2) TMI 123
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....nts provided the service of management, maintenance or repair service. The adjudicating authority vide impugned orders confirmed the demands along with interest and imposed the penalties. 3. The contention of the appellants is that the appellants entered into agreement for operation and maintenance of a power plant with M/s. GVK Industries Ltd. As per the terms and conditions of the agreement, the appellants were to run the power plant for generation of electricity and they were paid for generation of electricity and maintenance is only incidental for efficient running the power plant. The contention of the appellants is that the appellants were responsible to recruit the manpower for running the power plant and is responsible for whole of operation for generation of electricity. For this, appellants are entitled for base fee as provided under the agreement. The base fee as per the clause 5.4.2 of the agreement is that if the Actual Annual Availability of the Facility is 70 per cent in any, the operator shall receive a base fee of $375,000 in rupee equivalent for such year. For each additional percentage point that the Actual Annual Availability of the Facility exceeds 70 per ce....
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....harges are measured in terms of the generation of the electricity. As per the terms and conditions of the agreement, the appellants were entitled for payment even without generation of electricity in case of maintenance and repair. Ld. Jt. CDR relied upon the Annexure-1 to letter dated 22-11-2007 submitted by the appellants whereby the repair and maintenance charges separately were shown. The contention of the Revenue is that the contract is mainly for repair and maintenance without which operation of the plant is not possible and appellants are paid for repair and maintenance separately as per the terms and conditions of the agreement. The revenue also relied upon the provisions of section 65A of the Finance Act and to submit that when for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of section 65 of the Act, the classification method was provided. As per the provisions of section 65, the most specific description shall be preferred to sub-clauses providing a more general description and in case of composite services consisting of a combination of different services which cannot be classified in a manner specified under ....
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....by - (i) Any person under a maintenance contract or agreement; or (ii) A manufacturer or any person authorized by him, in relation to a maintenance or repair or servicing of any goods or equipment, excluding motor vehicle. The statutory definition was amended with effect from 16-6-2005, which reads as under:- "(64) "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 (a) maintenance or repair including reconditioning or restoration, or servicing of any goods, or equipment excluding motor vehicle; or (b) maintenance or management of immovable property." Further, we find that the statutory definition was further amended with effect from 1-5-2006, which reads as under:- "(64) "manageme....
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....der:- "19 ... Therefore, necessarily the total consideration relatable to the licensing rights of the know-how as well as with the services rendered by way of advice, consultancy or technical assistance in the context of such licensing use has to be bifurcated for the purpose of the valuation of the taxable service rendered, if any, by the consulting engineer as distinguished from the licensing of the 'know-how', provided by such consulting engineer under the agreement. 20. In the present case, agreement is a composite one and speaks of both licensing rights in respect of the "know-how" which was to be kept confidential and technical assistance which was to be rendered in context thereof. Obviously, all the consideration that was relatable to technical assistance, particularly of 50 man-days technical assistance, was liable to be taxed under the said Act as a taxable service. This exercise of apportioning and finding out the consideration that was relatable to the technical assistance which was rendered in the context of licensing rights has not been attempted by the Commissioner (Appeals), though he appears to have been appropriately conscious of the fact that, "apart from a....