2013 (1) TMI 602 - AT - Service Tax

Waiver of pre-deposit - Stay of recovery - Management, Maintenance or Repair Service - Business Auxiliary Service - Power plant belonging to the appellant s subsidiary was being operated and maintained by the appellant under the agreement - Held that - It appears that the transaction in question was on principal-to-principal basis and the appellant was required to operate and maintain the power plant of its subsidiary by using their own work force. Decision in case CMS (I) OPERATIONS & MAINTENANCE CO. P. LTD.(2007 (5) TMI 74 - CESTAT, CHENNAI) is in favour of assessee. Waive of pre-deposit and stay granted

Summary

Issues:
1. Appellant seeks waiver and stay in respect of adjudged dues including service tax and education cess for the period from October 2008 to September 2009 under "Management, Maintenance or Repair Service."
2. Classification of the activity undertaken by the appellant for their subsidiary.
3. Application of Section 65A(2) of the Finance Act 1994.
4. Prima facie view on the appellant's case against the impugned demand.

Issue 1:
The appellant filed an application seeking waiver and stay regarding the adjudged dues, including service tax and education cess, for the period from October 2008 to September 2009 under the Head "Management, Maintenance or Repair Service." The impugned demand was based on the gross amount collected by the appellant from their subsidiary for operating and maintaining the power plant owned by the latter during the mentioned period.

Issue 2:
The essential character of the activity undertaken by the appellant for the benefit of their subsidiary was debated to be imparted by "management, maintenance or repair" rather than the generation of power. The learned Addl. Commissioner argued that, under Section 65A(2) of the Finance Act 1994, such activity could only be classified as "Management, Maintenance or Repair service." The distinction was sought to be made from a previous case, CMS (I) Operations & Maintenance Co. P. Ltd.

Issue 3:
After considering the submissions, the Tribunal found a prima facie case for the appellant. It was acknowledged that the power plant belonging to the appellant's subsidiary was operated and maintained by the appellant during the relevant period under the agreement. The terms of the agreement supported the appellant's claim that the transaction was on a principal-to-principal basis, with the appellant required to operate and maintain the power plant using their own workforce. The appellant argued that they were essentially manufacturing electricity and should be classified under "Business Auxiliary Service."

Issue 4:
Based on the cited judgments and the terms of the agreement, the Tribunal held a prima facie view that the appellant had a case against the impugned demand. It was noted that the aspects covered in the cited judgment aligned with the appellant's situation. Therefore, the Tribunal granted waiver of predeposit and stay of recovery in respect of the adjudged dues, considering the case law cited by the appellant's counsel.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the Tribunal's decision and reasoning for each issue.