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2019 (6) TMI 211 - AT - Service TaxMaintenance, Management and Repair service - pure operation contract - demand of service tax - levy of interest - imposition of penalty under Section 76 and 78 of the Finance Act, 1994 - extended period of limitation - HELD THAT - The appellants are engaged in the Operation of plant and Maintenance and Repair is part of the said contract. The primary nature of the service is of Operation, and Maintenance and Repair is incidental to the provision of the service of Operation. Tribunal in the case of GENTING LANCO (INDIA) PVT LTD VERSUS CCT, GUNTUR GST (VICE-VERSA) 2018 (11) TMI 167 - CESTAT HYDERABAD has held that the main activity relates to Operation, and Maintenance and Repair in process of Operation, demand cannot be sustained under the category of Maintenance, Management and Repair service. Moreover, the appellant has also claimed benefit of limitation - Tribunal has also held that in the peculiar facts and circumstances of the case, the view harbored by the appellant may be bonafide. Thus extended period of limitation cannot be invoked. Appeal allowed - decided in favor of appellant.
Issues:
Confirmation of demand of service tax, interest, and imposition of penalty under Section 76 and 78 of the Finance Act, 1994; Interpretation of contracts for Maintenance, Management, and Repair service; Cum-tax benefit extension; Invocation of extended period of limitation; Tax liability of Works Contract pre-01.06.2007. Analysis: 1. Confirmation of demand of service tax, interest, and penalty: The appeal was filed against the confirmation of demand of service tax, interest, and penalty under Section 76 and 78 of the Finance Act, 1994. The appellant, engaged in manufacturing and marketing of various products, argued that the contracts in question were pure operation contracts and not covered under Maintenance, Management, and Repair service. The primary nature of the service provided was deemed to be operation, with Maintenance and Repair being incidental. The Tribunal cited previous judgments to support the appellant's argument, ultimately allowing the appeal. 2. Interpretation of contracts for Maintenance, Management, and Repair service: The appellant contended that the contracts in question were pure operation contracts and not subject to service tax under Maintenance, Management, and Repair service. They highlighted that certain activities mentioned in the contracts were subsidiary to the operation of the plant and not maintenance or repair activities. The Tribunal analyzed the nature of the services provided and concluded that the primary activity was operation, with maintenance and repair being ancillary. 3. Cum-tax benefit extension and invocation of extended period of limitation: The appellant raised concerns regarding the extension of Cum-tax benefit and the invocation of the extended period of limitation. They argued that the demand was beyond the statutory limitation period. The Tribunal considered the appellant's arguments and found merit in their claim, holding that the extended period of limitation could not be invoked in the circumstances presented. 4. Tax liability of Works Contract pre-01.06.2007: Another issue raised was the classification of the contract as a Works Contract and the liability to tax prior to 01.06.2007. The appellant presented evidence to support their claim that the contracts were not liable to tax before the specified date. Citing relevant case law, the Tribunal agreed with the appellant's position and allowed the appeal based on the nature of the services provided and the timeline of tax liability. In conclusion, the Tribunal allowed the appeal filed by the appellant, ruling in their favor based on the analysis of the contracts, nature of services provided, and relevant legal precedents. The judgment highlighted the distinction between operation contracts and Maintenance, Management, and Repair service, ultimately leading to the decision in favor of the appellant.
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