TMI Blog2022 (5) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ply 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 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 category of repair and maintenance as defined under Section 65(64) of the Finance Act 1994. As detailed above,Show cause notices were issued proposing demand of service tax and proposing imposition of penalty on appellant. The adjudicating authority after considering the submissions made by the appellant by respective impugned orders confirmed the demands along with interest and also ordered f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 all the work contract as per Tamilnadu General Sales Tax (Fifth Amendment) Act (Act No. 15 of 1999) if it is applicable for supply of product water. The entire payments were received by the Appellants after deducting sale tax on the quantum of product water which is evident form the invoice raised by the appellant. Invoice was raised by the Appellant showing the result of the water purification containing TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Nagarjuna Construction Company Ltd. Vs. GOI- 2010-TIOL-403-HC-AP-ST Shapporji Pallonji Infrastructure Capital Co. Ltd. Vs. CST, Chennai 2017-TIOL-2673-CESTAT-MAD 4.1 As regard the cum-tax-price benefit, he submits that the adjudicating authority has erred in extending the benefit of cum-tax-price in as much as there is no evidence on records to show that the invoice specifically say that gross amount charged includes Service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen 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 in consideration of price levelised Tariff @Rs. 57.94 / kilo Liter (Rupees Fifty-Seven and Paisa Ninety-Four per Kilo Liter) offered by the contractor and accepted by the Board in B.P. Ms No. 156/CMW/ dated 13.12.2003. The IV Programme Schedule provide as under (a) The ownership of assets for which investment is made by the contractor towards rehabilitation and replacement work will remain with the contractor till the expiry of agreement period of 7 years. In the unlikely event of fore closure of work, contractor will be compensated to the extent of repayment value of the investment made as on dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials, 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 appellant on this count is unsustainable. 5.2 We also find that the Hon‟ble Supreme Court dismissed the appeal filed by Commissioner of Central Excise, Pondicherry against the CESTAT Final Order Nos. 614-615/2007, dated 21-5-2007 as reported in 2007 (7) S.T.R. 369 (Tri.-Chennai) [CMS (I) Operations Maintenance Co. Pvt. Ltd. v. Commissioner]. While dismissing the appeal, the Supreme Court passed the following order: Delay condoned. Heard learned counsels for the parties and perused the relevant material. We do not find any legal and valid ground for interference. The civil appeal(s) is/are dismissed. The Appellate Tribunal in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air 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 the same. The word operation‟ is not used in the definition of Maintenance and repair‟ services which is relied by department as amended with effect from 16-6-2005. The said word is seen used in the definition of Business Support Services ( Operational assistance‟). Thus, it is very much clear that management of immovable property does not include operation activities. In addition, it cannot be said that the appellants are doing management service for the reason that the management service is done by appellants to themselves and not to any other person. The appellants are operating the power plant to generate electricity on behalf of the owner for supplying the same to TNEB. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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