2005 (1) TMI 508 - AT - Service Tax

Summary

Issues:
1. Whether charges for erection and commissioning can be brought under the net of Service Tax.
2. The applicability of Board's Circular on commissioning and installation services.
3. The binding nature of Board's Circular on authorities regarding Service Tax.

Analysis:

1. The appeal arose from the rejection of the assessee's review against an order confirming Service Tax on erection and commissioning activity. The assessee argued that this activity was part of post-manufacturing and not an independent service under Service Tax. The introduction of Service Tax on services by a Consulting Engineer was clarified through Circulars by the Board. The Board's Circular No. 79/9/2004-S.T. specifically stated that charges for erection, installation, and commissioning are not covered under Consulting Engineer Services, thus not taxable under Service Tax. The advocate contended that this Circular is binding on the department, citing the case of Dhiren Chemicals - 2002 (139) E.L.T. 3 (S.C.).

2. The SDR relied on a previous Tribunal ruling in the case of Transweigh (India) Ltd. v. CCE, Mumbai - 2004 (170) E.L.T. 527 (Tri. - Mumbai) to support the imposition of Service Tax on commissioning and installation services. However, the Tribunal noted that this ruling was rendered before the issuance of the Board's Circular. The Tribunal emphasized that the Board's clarification excluded commissioning and installation services from the category of Consulting Engineer Services, making them not taxable under Service Tax.

3. After careful consideration, the Tribunal found that the impugned order was not sustainable in light of the binding nature of the Board's Circular on authorities. Therefore, the Tribunal set aside the order, allowing the appeal with any consequential relief. This decision was based on the fact that the Board had clarified that commissioning and installation services should not be treated as Consulting Engineer Services under Service Tax, as per the Circular issued on 13-5-2004.

In conclusion, the Tribunal's judgment favored the appellant by setting aside the order imposing Service Tax on erection and commissioning charges, relying on the binding nature of the Board's Circular excluding these services from the purview of Consulting Engineer Services under Service Tax.