2023 (3) TMI 498 - AT - Service Tax

Levy of Service Tax - appellant undertakes to operate and maintain power plants of various clients in terms of the agreements entered with them - liability of tax on operational charges provided to the owners of the power plants - levy of penalty - HELD THAT - The issue whether service tax is required to be discharged on operational charges by the appellant has already been examined and decided in favour of the appellant by this Bench in the appellant s own case OPERATIONAL ENERGY GROUP INDIA PRIVATE LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI SOUTH COMMISSIONERATE 2019 (1) TMI 1236 - CESTAT CHENNAI where it was held that The issue as to whether activity of production of electricity in power plant would amount to management of immovable property or otherwise has been analyzed and discussed by this Bench in the case of M/S. SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LIMITED, M/S. OPERATIONAL ENERGY GROUP OF INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI 2017 (6) TMI 225 - CESTAT CHENNAI and held in favour of assessee. Thus, the assessee is not liable to pay service tax on the operational charges provided by them to the owners of the power plants and, imposition of penalty does not arise. Appeal allowed.

Summary

Issues involved:
1. Liability to pay service tax on operational charges provided by the appellant to power plant owners.
2. Imposition of penalty.

Analysis:

Issue 1: Liability to pay service tax on operational charges
The appellant, a company operating and maintaining power plants for clients, was under scrutiny for not discharging service tax on operational charges received from clients, despite paying on maintenance charges. The Revenue contended the liability on operational charges. The appellant argued citing precedents in their favor, including a Tribunal decision in a related case. The Tribunal reviewed the matter, referencing the earlier decision, where it was held that the production of electricity in a power plant did not amount to management of immovable property. Consequently, the Tribunal ruled in favor of the appellant, stating that they were not liable to pay service tax on operational charges.

Issue 2: Imposition of penalty
Given the resolution of the first issue in favor of the appellant, the question of imposing a penalty did not arise. The Tribunal, based on its findings on the liability for service tax, concluded that there was no basis for imposing a penalty. Consequently, the appeals were allowed, and any consequential relief was granted as per the law.

In summary, the judgment by the Appellate Tribunal CESTAT Chennai addressed the liability of a company to pay service tax on operational charges provided to power plant owners. The Tribunal ruled in favor of the appellant, citing precedents and previous decisions, and concluded that the appellant was not liable to pay service tax on operational charges. As a result, the question of imposing a penalty did not arise, and the appeals were allowed with any necessary relief in accordance with the law.