TMI Blog2011 (2) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/2009, dated 31-7-2009 passed by the adjudicating authority. The brief facts of the case are that the appellants entered into an agreement with M/s. GVK Industries Ltd. for operation and maintenance of power plant. A show-cause notice dated 28-2-2008 was issued for the period 1-7-2003 to 30-9-2007 demanding service tax by treating the appellants as provider of maintenance or repair service. Another show-cause notice was issued on 19-5-2009 for the period 1-10-2007 to 30-9-2008 demanding service tax on the ground that appellants 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. Jt. CDR appearing on behalf of the revenue submitted that appellants are not owner of the power plant and the ownership lies with M/s. GVK Industries Ltd. and appellants are only managing and look after the repair of the power plant including building and also operating the plant. The raw materials are procured by M/s. GVK Industries Ltd. As per the terms and conditions of the agreement, the appellants required to undertake major maintenance, scheduled maintenance or unscheduled maintenance of the power plant and the charges 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 upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded maintenance service relating to machinery/equipment of the power plant of M/s. GVK Industries Ltd. Hence, the issues now raised by the Revenue during the argument are not the basis for confirming demands in the adjudication orders. Hence, the demands are not sustainable in view of the arguments earlier made. 7. We find that the demands are confirmed by treating the appellants as provider of management, maintenance or repair service. As per the Finance Act, "maintenance or repair service" 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 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 excludi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 allowing the use of the technical "know-how", technical services in various forms including deployment of technical manpower from TOP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the GVKPIL that theirs is an operation and maintenance company engaged in the manufacture of the electrical energy where maintenance/repair of the facility is incidental is not correct, on the reason that as per the Operation and Maintenance Agreements dated 4-7-1996, 23-12-1996 and 1-4-2005, GVKPIL are responsible for operation and maintenance of the facility to produce electricity. Accordingly, GVKPIL have provided maintenance services relating to the machinery/equipment of the power plant of GVKIL. These maintenance or repair services include routine equipment overhauls of the power plant, lubrication, replacing of consumables and chemicals, maintenance required for proper and safe operation of the power plant. These maintenance services are related to the maintenance or repair of the machinery/equipment of power generating plant such as Gas Turbines, Steam Turbines, Air Conditioners, Boiler, other auxiliary equipment etc. These services are nothing but maintenance or repair services of the power plant equipments." 11. Similar findings are recorded in the other adjudication order. The arguments raised by revenue are not the basis on which the demand is confirmed. In these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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