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2016 (4) TMI 499 - CESTAT MUMBAI

2016 (4) TMI 499 - CESTAT MUMBAI - 2016 (43) S.T.R. 137 (Tri. - Mumbai) - Refund claim - Reclassification - Management Maintenance and Repair Services - Agreement entered in to for operation and maintenance of power plant - Held that:- the contention raised by the ld. Counsel that the reclassification of the services as sought by the Adjudicating Authority in a refund claim filed by the assessee seems to be incorrect appreciation of the law. In our view, if the Revenue authorities were holding a .....

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d impugned order is also disposed of. - Decided against the revenue - Application No. ST/S/93889/14 Appeal No. ST/85154/14 & ST/CO/91029/14 - Final Order Nos. A/86894-86895/2016-WZB/STB and Stay Order No. S/86896/2016-WZB/STB - Dated:- 21-3-2016 - SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) AND SHRI C.J. MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri R.K. Das, DC (AR) For the Respondent : Shri Vishal Agarwal, Advocate ORDER PER: M.V. RAVINDRAN This stay petition and appeal is filed by the Reven .....

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e services of Consulting Engineer Services for power plants. The respondents had applied and obtained service tax registration under the category of Consulting Engineer Services vide service tax registration dated 04.08.2005. The respondents had entered into an Operation & Maintenance Agreement (hereinafter referred to O&M Agreement) with M/s. HPL Cogeneration Ltd. (HPLCL) on 30.07.2006 at Kolkata for providing operation and maintenance service for their power plant at Haldia in West .....

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t with HPLCL were not liable to service tax under the head Consulting Engineer or any other head of taxable service tax under the Finance Act, 1994. Accordingly, the respondents discontinued the payment of service tax w.e.f. July 2007 and intimated the department on 08.10.2007. The respondent also filed service tax returns in ST-3 claiming there under refund of ₹ 24,09,838/- being the service tax paid by them during the period from October 2006 to March 2007 and from April 2007 to Septembe .....

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current classification was Management Maintenance and Repair Services. Aggrieved by such an order, an appeal was preferred before the First Appellate Authority. The First Appellate Authority set aside the impugned order before him and directed the lower authorities to sanction the refund. 4. Ld. Departmental Representative after taking us through the show-cause notices, Adjudicating Authority s order and First Appellate Authoritys order submits that the relevant portion of the operation and mai .....

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icit and clear terms of agreement, respondent assessee could not have paid the tax and claimed refund subsequently. It is his further submission that the services rendered by the respondent assessee would fall under the definition of Management Maintenance and Repair Services and correctly classified by the Adjudicating Authority. He would submit that due to this reasons the impugned order be set aside. 5. Ld. Counsel appearing for the respondent assessee would submit that the article 6.3.3 of t .....

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nance Company is on identical set of facts. It is his further submission that the Adjudicating Authority could not have reclassified the services rendered by them in a refund claim filed by the respondent assessee, if the revenue wanted to reclassify the services rendered they should have done so by issuing a separate show-cause notice. 6. We have considered the submission made at length by both sides and perused the records. 7. The issue to be decided in this case is whether the appellant has c .....

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n of electricity and incidentally also maintain the same by way of annual Maintenance and Repair to the plant for operations. 9. The First Appellate Authority after considering the facts of the case in his impugned order recorded the following findings. " 23. All said and done, the Adjudicating Authority has nowhere denied the fact that the Operator i.e. the appellants contract with the owner is to operate the power plant for generation of energy and not merely to maintain it. The appellan .....

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he service of Management Maintenance and Repair Services as defined under Section 65 of the Finance Act, 1994 and that the appellants claim that their services are not covered under Service tax is not correct and therefore not acceptable. 24. I do not find any merit in the Adjudicating Authoritys above contentions. For the sake of illustration, I may observe that if someone hires a driver to drive ones vehicle; the drivers prime duty is to drive the vehicle though its cleaning, maintenance .....

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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 exclusively to maintain, manage or repair their Power Plant. 25. In find ample .....

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nstitute services to any other person/organisation. These impugned functions were incidental to their main activity of producing power. The O&M contract is a works contract and it is bad in law to vivisect it and tax certain activities covered by the contract. A reading of the whole contract makes it plain that the same was intended to ensure generation and supply of power as per PPA and not for rendering any service to the owner. 26. I, therefore, hold that the subject activity of the appel .....

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ent involved in the present refund claim is concerned, I may agree with appellant s contention that in terms of Article 6.3.3 of the O&M Agreement. The operator free payable for each operating year was inclusive of the Operator s Income Tax and any and all other taxes as applicable on such free but was exclusive of service tax at the rates as applicable on such fee at the time of invoicing such fee. Such service tax shall be shown and claimed separately by the operator. No doubt, the appella .....

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