2016 (4) TMI 497 - AT - Service Tax

Service tax liability - Maintenance or Repair Services for the period prior to 01-05-2006 and subsequently under management, maintenance or repair service - Undertook operation of Bulk Handling Plant of ONGC and received consideration - Held that - prior to 01-05-2006, the definition of management maintenance or repair service will not apply as the maintenance or repair service are not for management or repair service, but these are consumed by them for smooth functioning of bulk handling plant. As regards the tax liability for the subsequent period from 01-05-2006, it is found that the bulk handling plant was handed over by ONGC to respondent for operation and completing the contract to ONGC in rendering such activities, the respondent 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. From reading the scope of work as per agreement, principal job entrusted to respondent is in connection with smooth operation of bulk handling plant for obtaining desired results from the bulk handling plant. The agreement between ONGC and respondent does not indicate that respondent was required to provide any service relating to Management, Maintenance or Repair Services to ONGC, nor does the agreement indicate any separate fees is to be paid to respondent for Management, Maintenance or Repair Services. In order to overcome this lacuna, government has enlarged the scope of services under Business Support Services w.e.f. 01-05-2011 by including services in respect of Operational or Administrative assistance in any manner which may cover the operation of plant. Since these services were taxable w.e.f. 01-05-2011 under Business Support Services , it is not taxable under Management, Maintenance or Repair Services for earlier period but the same is forfeited by one of the Tribunal s order. - Decided against the revenue

Summary

Issues:
1. Whether the activity of the respondent falls under "Maintenance or Repair Services" for the period prior to and post 01-05-2006.
2. Whether the respondent is liable to pay service tax with interest and penalties under various sections.
3. Whether the respondent's activities constitute "management, maintenance or repair services" as per the Finance Act, 1994.
4. Whether the agreement between the respondent and ONGC implies rendering of "maintenance or repair services" to ONGC.
5. Whether the respondent is providing services to themselves and not to another person.

Analysis:

Issue 1:
The revenue claimed that the respondent's activity fell under "Maintenance or Repair Services" pre and post 01-05-2006. The Adjudicating Authority dropped the proceedings initiated. The revenue argued that the respondent was rendering such services based on the agreement with ONGC. The appellant contended that the respondent was not providing such services to ONGC. The Tribunal analyzed the definition of "maintenance or repair" pre and post 01-05-2006 and concluded that the services were for the smooth functioning of the bulk handling plant, not for management or repair services.

Issue 2:
The revenue demanded service tax, interest, and penalties. The Tribunal found that the respondent's activities did not attract service tax liability under maintenance or repair services. It was established that the respondent undertook maintenance or repair services for self-use, not for providing services to a client, thus not incurring liability.

Issue 3:
The revenue argued that the respondent's activities constituted "management, maintenance or repair services" as per the Finance Act, 1994. However, the Tribunal found that the respondent's services were for self-use and not provided to ONGC as a client, thereby not falling under the category of taxable services.

Issue 4:
The revenue relied on the agreement between the respondent and ONGC to support their claim of providing maintenance or repair services. The Tribunal observed that the agreement did not require the respondent to provide separate management, maintenance, or repair services to ONGC, strengthening the argument that the services were for self-use.

Issue 5:
The Tribunal referred to a previous decision where it was held that if the appellants undertook maintenance activities for themselves and not for another person, no liability was incurred. Applying this precedent, the Tribunal concluded that the respondent was providing services to themselves and not to another person, thus rejecting the revenue's appeal.

In conclusion, the Tribunal upheld the lower authorities' decision, stating that the respondent's activities did not attract service tax liability and that the appeal filed by the revenue was rejected.