2007 (11) TMI 141 - AT - Service Tax

Operating and Maintenance service to Combined Power Plant - Revenue proceeded against the appellant on the ground that they were rendering Consulting Engineer service - service of Operating and Maintaining a Power Plant does not involve any Engineering Consultancy Comm (A) remanded matter to Original Authority to recompute the duty liability - this cannot be done because a contract cannot be vivisected to levy service tax on a portion of the contract assessee s appeal allowed

Summary

Issues:
1. Whether the appellants were providing 'Consulting Engineer' service to a client.
2. Whether the service of operating and maintaining a power plant falls under the category of 'Consulting Engineer' service.
3. Whether the impugned decision of the Commissioner (Appeals) was correct.
4. Whether the Tribunal's decision in the case of M/s. Rolls Royce Industries Power (I) Ltd. is applicable to the present case.

Analysis:
1. The appeals were filed against the Order-in-Appeal passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals) regarding the demand for service tax by the Revenue on the ground that the appellants were providing 'Consulting Engineer' service to a client. The Assistant Commissioner confirmed the demand and imposed a penalty, which was later amended. The Commissioner (Appeals) remanded the matter for re-computation of service tax liability and penalty, leading the appellants to appeal to the Tribunal.

2. The Tribunal analyzed the Operation and Maintenance Agreement between the appellants and the client, emphasizing that the Revenue alleged the appellants were providing 'Consulting Engineering Service.' However, the Tribunal noted that the service of operating and maintaining a power plant does not fall under the category of 'Consulting Engineer' service. Citing precedent cases, the Tribunal highlighted that the operator of the plant is autonomous and responsible for operation and maintenance without providing engineering consultancy, as required for service tax liability.

3. The Tribunal found that the Commissioner (Appeals) failed to justify why the decision in the M/s. Rolls Royce Industries Power (I) Ltd. case was not applicable to the present situation. Additionally, the Tribunal emphasized that a contract cannot be vivisected to levy service tax on a portion related to consultancy, as per previous decisions. As the issue was squarely covered by precedent cases, the Tribunal set aside the impugned orders and allowed the appeal with consequential relief.

4. The Tribunal's decision was based on the interpretation of the definition of 'Consulting Engineer' under the Finance Act, 1994 and the specific nature of the services provided by the appellants in operating and maintaining the power plant. By aligning with previous judgments and highlighting the lack of engineering consultancy in the services rendered, the Tribunal concluded that the impugned decision was incorrect and provided relief to the appellants based on established legal principles and precedents.