2018 (11) TMI 167 – CESTAT HYDERABAD – TMI – Management, maintenance and repair services – generation of power by the appellant – whether excisable product or not – whether the amounts received as consideration by the appellant for operating power plant on behalf of his client would be liable for the discharge of service tax under the heading “management, maintenance and repair services?
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Held that:- The appellant is getting separate consideration for operation of the power plant and for maintenance and repair of the power plant. Appellant discharges the tax liability on the portion received as maintenance and repair services but has claimed that no tax is payable on operating part of the contract.
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The issue is no more res integra. The Tribunal in the case of GVK power and infrastructure Ltd. [2018 (2) TMI 1027 – CESTAT HYDERABAD], where it was held that this maintenance under taken by the appellant is in order to keep the power plant in the working conditions; there is no
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common order. 2. The relevant facts that arise for consideration in the appeals filed by the assessee/appellant are during the period in question, 16.06.2005 to March, 2014 appellant was issued various show cause notices for the demand of service tax liability under the category of management, maintenance and repair services , on the ground that appellant had been operating and generating electricity for M/s Lanco Kondapalli Power Plant Ltd. It is the case of the appellant before the lower authorities that the contract entered by appellant is for operation and maintenance of power plant of M/s Lanco Kondapalli Power Plant Ltd and had two portions to it. One is maintenance and another is operation. It is the submission that the demand of service tax liability is on the amount/consideration received by the appellant from the said M/s Lanco Kondapalli Power Plant Ltd towards operation of the power plant. The adjudicating authority has confirmed the demands so raised along with interest. I
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al issue has been decided by this Bench in the case of GVK Power and Infrastructure Ltd. He would take us through the entire case law and the factual position in those cases. He would submit that the said decision of the Bench is reported at 2018-TIOL-788-CESTAT-Hyderabad. As regards one of the appeals, ST/30407/2016, it is in respect of the interest demanded on the out-of-pocket expenses claimed by the appellant and he submits that the law is now settled by the judgment of the Intercontinental Consultants and Technocrats Pvt Ltd and has been upheld by the Apex Court which is reported at 2018-10-GSTL-401. 4. Learned departmental representative reiterates the findings of the lower authorities. It is his submission that operation of a power plant includes various other aspects which are correctly classifiable under heading management, maintenance and repair services as appellant is undertaking the maintenance of the power plant, taking shut down for repairing the machineries which would
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ant. Appellant discharges the tax liability on the portion received as maintenance and repair services but has claimed that no tax is payable on operating part of the contract. 7. We do find that the issue is no more res integra. The Tribunal in the case of GVK power and infrastructure Ltd (Supra) (wherein one of us, M.V.Ravindran was also a member) and has settled the issue as recorded in Paras 7 to 11 of the order, which we reproduce. 7. Heard both sides at length and perused records. On perusal records we find that the issue, as correctly pointed out by both sides is regarding the taxability of the amount received as consideration by the appellant. 8. On perusal of contracts which were produced by the Ld. Counsel in the appeal memorandum, we find that the contract is for operation and maintenance of the power plant to produce electricity and transmit it to the power grid. Appellants are challenging orders on two grounds i.e. production of electricity is manufacture of goods and that
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e laws and producing excerpts from them, concluded operation of power plant is not taxable under maintenance and repair services. The bench considered the following case laws. a) CMS Operation and Maintenance Co. Pvt Ltd., Vs. CCE[2007(7) STR 369(T)] = 2007-TIOL-892-CESTAT-MAD b) Rolls Royce Industrial Power(I) Ltd., Vs. CCE[2006(3) STR 292(T)] = 2004-TIOL-529-CESTAT-DEL c) Basti Sugar Mills Co. Ltd Vs. CCE[2007(7) STR 431(T)] = 2007-TIOL-657-CESTAT-DEL d) Commissioner Vs. Basti Sugar Mill Co. Ltd[2012(25) STR J154(SC)] e) Inox Air Products Ltd. Vs. CCE[2015 (38) STR 90(T)] = 2014-TIOL-803-CESTAT-MUM f) CST-Mum-II Vs. Global S.S. Construction Pvt Ltd [2016-VIL- 240-CST-MUM-ST = 2016-TIOL-832-CESTAT-MUM g) CEST-Mum-II Vs. Polydrill Engineers Pvt Ltd [2016-VIL-263 CST-MUM-ST = 2016-TIOL-927-CESTAT-MUM h) CST-Mum-II Vs. Evonik Energy Services [2016-VIL-265 CSTMUM- ST] = 2016-TIOL-1073-CESTAT-MUM. 11. The issue involved in this case being similar/identical, we have no hesitation to hold th
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e appellant GVK Power and Infrastructure Ltd as to that the generation of electricity being a manufactured product is being non-excisable, service tax liability does not arise under any services. We do not find any reason to deviate from such a view as already taken and recorded in GVK Power and Infrastructure Ltd. Accordingly, the revenue s appeal is rejected. 10. As regards appeal ST/30407/2016 of the appellant/assessee, an amount of ₹ 22,999/- is demanded and confirmed as tax liability under the category of management, maintenance and repair services . This amount of tax has been calculated on the amount received as consideration for the billing of the appellant for out-of-pocket expenses and the reimbursement thereof. We find that the issue is now settled by the Apex Court in the case of Union of India Vs Intercontinental Consultants and Technocrats Pvt Ltd (supra) wherein the Apex Court has upheld the judgment of Hon ble High Court of Delhi that reimbursable expenses cannot
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