2005 (5) TMI 362 - AT - Service Tax

Summary

Issues:
Demand of Service tax on charges for calibration of measuring instruments treated as Engineering Consultancy Service.

Analysis:
The appeal was against a demand of Service tax on charges for calibration of measuring instruments collected by the appellants from their customers, treated as Engineering Consultancy Service for the period of dispute from 7-7-1997 to 28-2-2002. The original authority confirmed the tax demand and imposed penalties, a decision upheld by the Commissioner (Appeals), leading to the present appeal.

The appellant argued that calibration of measuring instruments is a scientific activity and not an engineering activity. The appellant's counsel contended that prior to 1-7-2003, the service was not taxable and did not fall under Engineering Consultancy Service. It was highlighted that the service provided by the appellants was tangible, not falling under the definition of "consulting engineer" or "Engineering Consultancy Service." The counsel emphasized that the department did not prove that the calibration was done by engineers, and the findings were based on personal notions rather than concrete evidence.

The Tribunal observed that the show cause notice did not specify that the activity was performed by an engineer but by "qualified personnel." The definitions of "Consulting Engineer" and "Engineering Consultancy Service" require the service to be rendered by a professionally qualified engineer or engineering firm. As the notice did not establish the appellants as a professionally qualified engineering firm or the activity as performed by a qualified engineer, it was deemed impossible to accept the Revenue's claim that the calibration constituted "Engineering Consultancy Service." The Tribunal noted that calibration of measuring instruments fell under "technical inspection and certification," a taxable service effective from 1-7-2003, and not under Engineering Consultancy Service prior to that date.

Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The decision was dictated and pronounced in open court, providing relief to the appellant against the demand of Service tax on charges for calibration of measuring instruments.