TaxTMI 
TaxTMI 
2016 (11) TMI 645
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not pay service tax on operation charges. In the adjudication, the Adjudicating authority has confirmed the demand of service tax on the charges for operation of the plant under the head of Management, Maintenance or Repair Service. Being aggrieved by the impugned order, appellant filed this appeal. 2. Shri. Tarun Jain, Ld. Counsel along with Shri. Bhupendra Singh, Ld. Advocate appearing on behalf of the appellant submits that the issue has been considered in various judgments and settled that operation of plant does not liable for service tax under Management, Maintenance or Repair Service as the same is not taxable. In this regard he placed reliance on following judgments: (a) CMS Operation and Maintenance Co. Pvt Ltd. Vs. CCE[2007(7) STR 369(T)] (b) Rolls Royce Industrial Power(I) Ltd Vs. CCE[2006(3)STR292(T)] (c) Basti Sugar Mills Co. Ltd Vs. CCE[2007(7) STR 431(T)] (d) Commissioner Vs. Basti Sugar Mill Co. Ltd[2012(25) STR J154(SC)] (e) Inox Air Products Ltd. Vs. CCE[2015 (38) STR 90(T)] (f) CST-Mum-II Vs. Global S.S. Construction Pvt Ltd[2016-VIL-240CST-MUM-ST (g) CEST-Mum-II Vs. Polydrill Engineers Pvt Ltd [2016-VIL-263 CST-MUM-ST (h) CST-Mum-II V....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e envisaged in clause (f) of Section 2 of the Central Excise Act, 1944. The Hon'ble High Court of Orissa in Orient Paper & Industries Ltd. v. Orissa State Electricity Board (supra), had upheld imposition of Central Excise duty on electricity, electricity being manufactured goods as defined in the Central Excise Act '44. Therefore, we find that the argument of the appellants that the services involved are not liable to tax as Business Auxiliary Service has to be accepted. Such an activity is not covered bys Business Auxiliary Service. 28. As regards Repair or Maintenance Services, the argument of the appellants that they maintained only the plant and the taxable service of maintenance or repair of goods/equipment covered by the Act were done by the suppliers of the equipment under warranty or Annual Maintenance Contract (AMC) is reasonable and merits acceptance. If the appellants undertook these activities they had rendered the service to themselves and not to another person. Therefore no liability is incurred by the appellants on this account. 29. A works contract for manufacture of an item as prescribed in Section 2(f) of the Central Excise Act, 1944 cannot be vivisected to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is necessary to examine the question relating to valuation of the impugned services or the question whether the demands were made in time. Accordingly we allow both the appeals. Rolls Royce Industrial Power(I) Ltd 3. We have perused the records and have heard both sides. Learned Counsel representing the appellant took us through the clauses in the agreement to show that the appellants contract was not for rendering any service but for performing a job. The job in question was operating and maintaining the plant. It was emphasized that the payment was also on that basis. Provisions for bonus payment in case of operating the plant beyond the stipulated load factor and penalty for operating the plant below the stipulated load factor, makes this clear. In the course of operating and rendering the plant, the appellant was not giving any consultancy. They merely kept record and reported the results and other details of the operation. According to the appellant, that was again merely a report of performance and not any advice for consultancy. The initial agreement was for a period of operation of 5 years and the agreement also provided for renewal of the agreement. 4. The learne....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... providing any consulting or engineering help to the owner. The operator is fully autonomous and responsible for the performance of operation and maintenance. Whatever engineering issues are involved, it is for the operator to find solutions for, and attend to in the course of operation and maintenance. He is not required to render any advice or to take any orders from the owner. He cannot pass on the responsibility for operating the plant in any manner to the owner. Thus, there are no two parties, one giving advise and the other accepting it. Service tax is attracted only in a case involving rendering of service, in this case, engineering consultancy. That situation does not take place in the present case. Therefore, we are of the opinion that the duty demand raised is not sustainable. The learned SDRs contention about the 46^th Amendment and the Apex Court's decision in Builders Association of India and Others (supra) have no application in the present case since such a deemed definition does not exist in the case of job work as has taken place in regard to project contracts in sales tax. In these facts and circumstances, the appeal is allowed after setting aside the impugned ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of MP boilers & operation of IG plant & compressed Air system. It is the case of Revenue that respondent had provided services under "Management, Maintenance or Repairs" services, hence the same has to be taxed. 5. The findings of the adjudicating authority while dropping the proceeding initiated by show-cause notice are very relevant, which are reproduced. "3.1 A perusal of all the four contracts executed by assessee for providing service to M/s ONGC who have hired the services of the noticee for operation of Cooling Water System, Operation of Raw Water Treatment at Hazira Plant, Operation of MP Boilers & Operation of IG plant & Compressed Air System reveals that as per terms of said contracts, M/s ONGC had agreed to pay fixed amount per month to the Noticee for operating the said plants as per terms and conditions contained in the said contracts. All the four contracts have been executed more or less on similar terms and conditions except the monetary consideration which varies from plant to plant. On perusal of scope of work as http://www.vatinfoline.com/data/SERVICE TAX/2016/2016-VIL-240... 1 of 3 9/29/2016 12:00 PM defined in the said contracts and as discussed in detail v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding leakages on flanges including tightening of bolts, plugs etc. iv) Operation of battery limit valves of the work area, dosing of chemicals/special chemicals, preparing documents for Cooling Water Systems in given formats, providing calculation devise to shift operational staff for computation and process control and keeping/disposing of scrap material/cotton waste/mechanical parts etc. The above functions are performed by the Noticee as part of their main function of Operation of Plant. None of the above functions are performed in isolation and as such are classifiable as part of the main function i.e. Operation of Plant. The above functions are not performed independently and hence cannot be classified independently. 3.3.2 The Boards Circular F. No. 334/4/2006 TRU, dated 28/02/2006 and 334/1/2008/TRU, dated 29.02.2008 presented by the noticee have been seen. It is found that the Board has taken a consistent view that a composite service, even if it consists of more than one service, should be treated as a single service based on the main principal service and accordingly classified. The guiding principal in deciding on question of facts and law is to identify the essential fea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... We find that the finding recorded by the adjudicating authority are correct as nothing is brought to or notice which indicates that the respondent were engaged for and doing "Management Maintenance or Repairs" services. 6. In view of the foregoing, we hold that the impugned order is correct and legal and does not suffer from any infirmity. The appeal is rejected. Polydrill Engineers Pvt Ltd 7. Undisputedly, the respondent has been awarded a contract for operation of the bulk handling plant of ONGC on a consideration for producing desired quantum of work. The said agreement also provided for regular, periodical inspection maintenance or repair and other activity to be done by the respondent. It is the case of the revenue that this activity of the respondent could fall under the category of "maintenance or repair services' prior to 01-05-2006 and subsequently under "management maintenance or repair services". In our considered view, the lower authorities are in error to come to such a conclusion. The definition that falls under our consideration is reproduced below: - Prior to 16-06-2005 Section 65(64):- "maintenance or repair" means any service provided by- (v) any person und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng desired results from the bulk handling plant. The agreement between ONGC and respondent does not indicate that respondent was required to provide any service relating to Management, Maintenance or Repair Services to ONGC, nor does the agreement indicate any separate fees is to be http://www.vatinfoline.com/data/SERVICE TAX/2016/2016-VIL-263... 2 of 3 9/29/2016 12:02 PM paid to respondent for Management, Maintenance or Repair Services. In order to overcome this lacuna, government has enlarged the scope of services under "Business Support Services" w.e.f. 01-05-2011 by including services in respect of "Operational or Administrative assistance in any manner" which may cover the operation of plant. Since these services were w.e.f. 01-05-2011 under "Business Support Services", it is not taxable under Management, Maintenance or Repair Services for earlier period. 9. Our above said view is fortified by the ratio by decision of the Tribunal in the case of CMS (I) Operations and Maintenance Co. Pvt. Ltd. - [2007 (7) STR 369 - 2007-VIL-36-CESTAT-CHE-ST], we reproduce the said ratio: "as regards Repair or Maintenance Services, the argument of the appellants that they maintained only the pl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d therefore not acceptable. 24. I do not find any merit in the Adjudicating Authority's above contentions. For the sake of illustration, I may observe that if someone hires a driver to drive one's vehicle; the driver's prime duty is to drive the vehicle though its cleaning, maintenance, proper up-keep etc. will be incidental to his prime duty of driving the said vehicle. Same way, the appellant's contract with the owner under the impugned O&M Agreement dated 30.06.2006 is to Operate the plant in accordance with an operating regime indicated by the Owner, including enhanced operations as per Schedule 13. Besides, they are obliged to Maintain the plant in a manner such as to maximize the efficiency, output, availability, and starting and operational reliability of the Plant, minimize the heat rate, downtime, forced outages, fuel consumption and losses (evaporation or otherwise), including performance of scheduled inspections and overhauls of the plan. The appellants are required to maintain the plant in such a manner to prevent wastages, theft, pilferage and shortages etc. from the plant. One cannot infer that the appellants had entered into the aforesaid O&M Agreement with the Owner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t an amount of Rs. 3,36,278.00. This fact has been duly disclosed by the appellants in their refund claim in Form-R submitted to the Assistant Commissioner of Service tax, Division-IV, Mumbai and further admitted in course of personal hearing held on 10.10.2012 before me. Therefore, the refund claim for a total sum of Rs. 24,09,838.00 becomes allowable to the appellants. However, a sum of Rs. 3,36,278.00 merits to be credited to the Consumer Welfare Fund as refund thereof to the appellants in the given circumstances would constitute unjust enrichment'." 10. As against the above reproduced factual finding by First Appellate Authority it is to be noted that the grounds of appeal as taken by the revenue in the appeal memorandum are nowhere contradicting the factual position as stated by the First Appellate Authority. It is also to be noted that the First Appellate Authority has correctly come to a conclusion that the similar issue has been decided by the Tribunal in the case of CMS (India) Operations & Maintenance Company (supra). Further, we also note that identical view has been taken by this bench in the case of CST vs. Polydrill Engineers P. Ltd. in Order no. A/86518/16/STB - 2016....