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2022 (5) TMI 568 - AT - Service TaxLevy of Service tax - Composite Maintenance Contract - erection and installation of water treatment plants its repair etc. - whether the activity carried out by the Appellant is taxable service under the “management, maintenance or repair service‟ as per department or the said activity is of conversion of portable water out of sea water and not attracting service tax? - benefit of cum-tax value - demand of penalty and interest - HELD THAT:- It can be seen from the definition of maintenance or repair services, that the requirement of statute prior to 2005 and even after the 2005 for taxability 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). The Appellant is being paid an amount of Rs. 57.94 Per Kilo Liter water 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 - the 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 appellant on this count is unsustainable. 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 are for self and the services of management, maintenance or repair are not attracted as the same is not provided to any client/customer - there are no hesitation in holding that the demand of service tax is not sustainable. Benefit of cum-tax value - HELD THAT:- The said appeal is solely on the issue of the benefit of cum-tax value extended by the Adjudicating authority to Appellant. Since the matter in favour of Appellant on merit itself, revenue appeal is not sustainable. Demand of penalty and interest - HELD THAT:- Since the entire demand has been set aside, consequently penalties and demand of interest are also not sustainable. Appeal allowed - decided in favor of appellant.
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