Operation and Maintenance Service — whether Consulting Engineering Service

II. Tribunal :

9. Operation and Maintenance Service — whether Consulting Engineering
Service ?

GVK Power & Infrastructure Ltd. v. CC., CE., S.T.
Visakhapatnam, 2008 (10) STR 146 (Tri.-Bang).

â A demand was raised
on the appellant under ‘Consulting Engineer’ service for the activity of
operation and maintenance of power plant. The Commissioner (Appeals) upheld the
same and remanded the case back to find out value of services relating to
consultancy and recompute the duty liability.

The appellant contended that their contract was not of an
engineering consultancy. They relied upon the decision of M/s. Rolls Royce
Industries Power (I) Ltd. v. CCE, 2006 (3) STR 292, wherein it was held that
it is the responsibility of the operator to operate the plant smoothly and if
any engineering problem arose, it was his responsibility to find out solution
and operate the machine. The operator was not required to render advice or
consultancy, no service tax was payable.

Citing Daelim’s case, the act of the Commissioner (Appeals)
to remand the case for recalculation was not accepted.

â The service on
providing operation and maintenance (O&M) power plant was treated by the Revenue
as Consulting Engineering Service. The facts of the case were considered
identical to those existed in the case of M/s. Rolls Royce Industries Power
(I) Ltd. v. CCE, 2006 (3) STR 292 (Tri.). Further, the Rolls Royce case was
followed by the Chennai Bench in the case of CMS (I) Operations & Maintenance
Co. Pvt. Ltd. v. CCE, Pondicherry 2007 (7) STR 369 (Tri.). Relying on the
ratio of these decisions and also considering the Daelim’s case 2006 (3) STR 124
(Trib.) that contract cannot be vivisected to levy tax on a part of the
contract, the appeal was set aside.