TaxTMI 
TaxTMI 
2022 (5) TMI 568
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....OMMR/AHD/2011 dtd. 08.04.2011 SCN dtd.22.01.2010 January 2006 to March 2009 1,82,21,781 3. Appeal No ST/438/2011 STC/11/COMMR/AHD/2011 dtd. 08.04.2011 SCN dtd. 07.10.2010 April 2009 to March 2010 51,01,908 4. Appeal No. ST/439/2011 STC/12/COMMR/AHD/2011 dtd. 08.04.2011 SCN dtd. 22.01.20210 January 2006 to March 2009 1,82,21,781/ 2. The fact of the case is that the appellant are engaged in the manufacture of water treatment plant and water treatment chemical. They also undertake various activities such as erection and installation of water treatment plants its repair etc., During the course of audit by the department, it was found that assessee had provided the taxable service "Operation and Maintenance Service‟ to M/s Tamilnadu Water Supply and Drainage Board (TWAD), but no service tax was paid thereon. As per the agreement No. CER/SR/MDU-25/2003-04 dated 27.02.2004 with Tamilnadu Water Supply and Drainage Board, the nature of work shown in the agreement was alleged to be Composite Maintenance Contract which also includes the cost of parts to be replaced. The nature of work shows that they were liable to Service tax under the ca....
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....ring any service to any third party. In the case of CMC (India) Operation & Maintenance Ltd. reported in 2007 (7)STR369 (T), it was held that tax payer who entered into a contract to run and manage a power plant and provide electricity to the owner, the revenue vivisected the contract and contended that such service provider under the contact were liable to Service tax under different service categories. The Tribunal rejected the Revenue‟s plea and held that service taxable under repair and maintenance service were not the services which were provided by the tax payer. The Tribunal held that the main object of the contract was generation and supply of power and the other functions were incidental to this primary object and could not be separately taxed under Service tax. The ratio of said decision is directly applicable to the case of appellant. 3.2 It was further submitted that in the present matter, adjudicating authority has erred in not appreciating clause 48 of the Agreement which related to "Sales Tax", it is provided in the agreement that from every payment made to the Appellant, deduction at source towards tax shall be made at 2% for civil work contract and 4% for ....
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.... demand is hit by limitation as they were issued another show cause notice invoking the extended period on the same grounds. He wrongly distinguished the Judgment of the Hon‟ble Supreme Court in the case of Nizam Sugar reported in 2006 (197) ELT 0465 (SC) and various other cases relied by the appellant in their submissions. The finding of Ld. Commissioner on the said limitation issue also baseless and the demand of service tax dropped on the ground of the same being barred by limitation. 4. On other hand, Shri Dinesh Prithiani learned Assistant Commissioner (AR) opposed the contention of the Ld. Counsel and reiterated the findings of impugned orders. He submits that assessee has been awarded specific work under specified Agreement with M/s TWAD Board which had required maintenance and repair of the plant of M/s TWAD. The activities carried out by the assessee clearly fall under the category of "maintenance or repair service" as defined under Section 65(64) of the Finance Act 1994. As regard the contention of Appellant, Learned Authorized Representative placed reliance on the following decisions: • CCE Raipur Vs BSBK Pvt. Ltd. - 2010-TIOL-646-CESTAT-DEL-LB ....
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....bility of the services rendered is very clear i.e. the maintenance or repairs has to be provided by any person under "contract" or "agreement". Undisputedly in the case in hand for the entire period, there was no specific maintenance contract entered by the appellant with M/s Tamil Nadu Water Supply and Drainage Board (TWAD Board).We have gone through the Contract/ agreement and find that the "Name of Work" as described in said agreement is as below: "Rajuvenation, replacement of membranes with required re-engineering works including supply of all materials, maintenance of raw material (open sea water) drawl system, pretreatment and post treatment by providing demineralization lower or by any other process, including maintenance of Transformers and accessories etc., complete and to supply a quantity of 3800m3/day potable water of specified standers, on Kilo Liter rate basis every day at the inlet of TWAD Board Product Water tank of plant site at Narippaiyar in Ramnathapuram District T.N. for a period of 7 years including Reject water disposed into sea" Further in the said contract as regard the consideration it described as under: "Now hereby agreed that ....
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....ter and the agreement reveals that the same is for supply of a quantity of 3800 m3 per day portable water of specified standard, on kilo Liter rate basis every day at the inlet of TWAD Board Product water tank of plant site for a period of seven years.As per the clause 42.1 the charges payable by M/s TWAD to Appellant for supply of potable water shall be in nature of water capacity charges, water variable charges and energy charges and invoices is prepared for supply of potable water with the same understanding. However, the sentence used in the above agreement " "Rejuvenation, replacement of membranes with required re-engineering works including supply of all materials, maintenance of raw material (open sea water) drawl system, pretreatment and post treatment by providing demineralization lower or by any other process, including maintenance ------------, can be held to be incidental. Further after going into all the conditions of the said agreement, it clearly reveals that contract is for supply of potable water every day at the inlet of TWAD Board Product water tank of plant site. The said contract/ agreement is not a "maintenance contract". Accordingly, the demand raised on the ....
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....s were maintained/repaired by suppliers thereof under warranty or maintenance contract and services rendered by the appellant amounted to self-service. It was also held that the contract for maintenance and operation of power plant cannot be vivisected as Works Contract as such contract is for supply and generation of power and not for rendering any services. The Ratio of aforesaid judgment is also applicable in present matter. 5.3 Without prejudice the above, we also find that the entire plant was handed over by TWAD Board to Appellant for operation and completing the contract to TWAD Board in rendering such activities, even if the Appellant undertakes the maintenance or repair services which in our view are for self and the services of management, maintenance or repair are not attracted as the same is not provided to any client/customer.Our above said view is fortified by the ratio of decision of the Tribunal in the case of SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL CO. LTD. vs. C.S.T., CHENNAI2017 (5) G.S.T.L. 65 (Tri. - Chennai) wherein the was held that "The activity carried out in the power plant is not solely management of power plant, but operation of....