2014 (12) TMI 628 - AT - Service Tax

Waiver of pre deposit - Classification of service - Management, maintenance and repair services or Business Auxiliary Service - Processing of fly ash for cement factory - Held that - There is no consideration provided by KPCL for the service of maintenance and repair by the appellant - KPCL is not receiving any consideration for fly ash supplied. Fly ash has no value and KPCL has a responsibility of disposal at cost. Therefore stand taken by the Revenue that free supply of fly ash is consideration for management, maintenance and repair, is not sustainable - Actual expense incurred on management, maintenance and repair of the leased facility is already covered by consideration received by the Society from the cement units which is collected as service charges. This is the revenue for the society which is utilized for their activities including management, maintenance and repair of the facility - That being the position, consideration for management, maintenance and repair service can be said to have been covered by service charge received by the appellants from their customers. Since the entire service charge collected is subjected to levy under Business Auxiliary Service and such consideration includes maintenance and repair also, it cannot be said that service tax is leviable under this category separately. In any case, it cannot be said that the appellants are providing management, maintenance and repair service to the cement units - Under these circumstances, it has to be held that the appellants have made out a prima facie case in their favour for complete waiver of pre-deposit of the dues - Stay granted.

Summary

Issues:
1. Whether the appellants providing management, maintenance, and repair services of fly ash plant & equipments to KPCL are liable for service tax.
2. Whether the consideration received for processing fly ash is already subjected to tax under 'Business Auxiliary Service'.

Analysis:

Issue 1:
The case involves a society formed by three cement units to handle fly ash generated by a power plant. The Revenue contended that the appellants were providing management, maintenance, and repair services to the power plant without receiving payment, leading to a service tax demand. However, the appellants argued that their contract with the power plant was primarily for fly ash disposal, not for management services. They cited previous decisions to support their claim. The tribunal found that the maintenance and repair of leased facilities could be considered self-service, and since the power plant did not provide any consideration for these services, the contention that free supply of fly ash constituted consideration for management services was deemed unsustainable. The revenue generated by the society from service charges covered the expenses for maintenance and repair, making it unnecessary to levy service tax separately. Therefore, the tribunal ruled in favor of the appellants, granting a waiver of pre-deposit and staying the recovery of the assessed dues for 180 days.

Issue 2:
Regarding the consideration received for processing fly ash, the appellants argued that it was already taxed under 'Business Auxiliary Service' and that the contractors responsible for maintenance work had also paid service tax. The tribunal agreed with this argument, stating that the service charge collected by the society from customers, which included maintenance and repair costs, was subject to tax under 'Business Auxiliary Service'. As a result, it was determined that service tax could not be levied separately on the maintenance and repair services provided by the appellants to the cement units. The tribunal held that the appellants had established a prima facie case in their favor, leading to a waiver of pre-deposit and a stay on the recovery of the assessed dues for 180 days.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal principles, and the tribunal's reasoning leading to the final decision in favor of the appellants.