Operational Energy Group India Private Ltd. Versus Commissioner of GST & Central Excise, Chennai South Commissionerate
Service Tax
2019 (1) TMI 1236 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 9-1-2019
Application No. ST/Misc/CT/41133/2017, Appeal No. ST/644/2012 – FINAL ORDER No. 40104/2019
Service Tax
Shri Madhu Mohan Damodhar, Member (Technical) And Shri P. Dinesha, Member (Judicial)
Shri J. Shankarraman, Advocate For the Appellant
Shri B. Balamurugan, AC (AR) For the Respondent
ORDER
Per Madhu Mohan Damodhar
The brief facts of the case are that appellants are registered with the department for rendering for Consulting Engineer Service (CES) and Maintenance or Repair Service (MMRS). During the course of audit, it was noticed that appellants had entered into an agreement with various clients like M/s.Thermax India Ltd., Tidel Park, JCT, Tamil Nadu Petroleum Ltd. etc for operation and maintenance of power plants. In terms of the agreements with the
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proposing service tax demand of Rs. 33,50,510/- along with interest as also imposition of penalty under Section 76 of the Finance Act, 1994. In adjudication, adjudicating authority vide an order dt. 30.07.2008 confirmed the proposed demand of service tax with interest and imposed penalty under Section 76 ibid. On appeal, Commissioner (Appeals) vide impugned order dt. 25.09.2012 modified the order of original authority to the extent of upholding the demand with interest for the normal period and set aside the penalty imposed under Section 76 ibid by invoking Section 80 ibid. Aggrieved by the order of lower appellate authority, appellants are before this forum.
2. Today when the matter came up for hearing, on behalf of the appellants, Ld. Advocate Shri J. Shankarraman submits that the very same issue has been dealt by this very Bench of the Tribunal in the case of Shapporji Pallonji Infrastructure Capital Co. Ltd. Vs CST Chennai in favour of appellant. He prays that following the ratio
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g of Section 2(f) of the Central Excise Act, 1944. That electricity is mentioned under Chapter Heading 27.16 of the First Schedule to the Central Excise Tariff Act, 1985, with effect from 1-3-2005 and electricity being an excisable product, though with nil rate of duty. We have to say that this argument of the appellant is not without substance. The major activity in the power plant is production of electricity which is an excisable product. Further, activity of production of electricity cannot be equated with management of immovable property. In a situation where the property is entrusted for management, the dominant intention would be to manage the property to raise profits whereas in the present case, it is for generation of electricity. The contention of the department may be applicable to a situation where the management is handed over to a management company for the sole purpose of management of the immovable property. In the present case, the sole purpose is not management of im
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aw sustenance from the decisions of this Tribunal as follows:-
(a) CMS (I) Operations & Maintenance Co. P. Ltd. v. Commissioner of Central Excise, Pondicherry – 2007 (7) S.T.R. 369 (Tri. – Chennai). Paragraphs 30 and 31 are reproduced as follows :-
“30. In the impugned order the Commissioner had rendered a finding that the facility was run by entering into contracts with different organizations such as CMS who had contracted to undertake the operation and maintenance of the facility. He found that though CMS was operating the facility for generating electricity, the entire activity was carried on by CMS on behalf of ST-CMS. The Commissioner also observed : “the agreement also provides for incentive payments/liquidated damages/environmental fines……” This does not happen when any agency provides service to another. A service provider is not responsible to achieve any performance target referring to which it becomes entitled to any reward or incurs penalties. Such provisions in the
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se, Vishakhapatnam – 2006 (3) S.T.R. 292 (Tri.)
“6. We have perused the records and considered the submissions made by both sides. The issue raised is the true meaning and scope of operation and maintenance agreement dated 14-3-1995. The appellant had taken over the plant and was operating & maintaining it in terms of the agreement. A perusal of the agreement makes it clear that it is a contract between owner and an operator. The terms of the contract vest complete freedom and responsibility on the appellant, without any interference by the owner. The owner's right is restricted to entry and access, to be satisfied that the operation is carried out according to standards. He also receives reports about the relevant aspects of operation, status and output. The payment for operation and maintenance are determined under the various clauses of the contract. In addition to the lump sum payment, it also provides for bonus and penalty. The terms of the contract do not envisage or involve pro
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does not exist in the case of job work as has taken place in regard to project contracts in sales tax. In these facts and circumstances, the appeal is allowed after setting aside the impugned order.”
(c) CLP Power Pvt. Ltd. v. Commissioner of Service Tax, Bombay – Final Order Nos. A/90709 to 90712/2016/STB/CLP. The relevant portion is extracted below:-
“…… In the present case, admittedly, there are two agreements into existence, one is clearly for operation of power plant and second is for maintenance on which appellant discharged the service tax. The agreement of operation of plant is neither involved any management of either plant or maintenance or repair. Entire plant was taken over by the appellant for operation. Therefore, the same does not fall under Management, Maintenance or Repair Service. As per our above discussion as well as settled legal position on the identical issue as per the above judgments, we are of the view that the impugned order is not sustainable, therefo
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