2005 (5) TMI 376 - AT - Central Excise

Summary

Issues:
1. Appeal against demand of Service tax on amounts received as Consulting Engineers.
2. Interpretation of Section 65(13) of the Finance Act, 1994.
3. Liability of Service tax on market research agency services.
4. Application of Board's Circular dated 7-10-1998 on market research agencies.
5. Decision on the appeal and rejection thereof.

Analysis:
The appeal in question pertains to the demand of Service tax on amounts received by the respondent as Consulting Engineers and market research agency services. The Commissioner (Appeals) had set aside the demand of Rs. 2,42,131/- and Rs. 2,78,884/- respectively. The key issue revolved around the interpretation of Section 65(13) of the Finance Act, 1994, which defines 'Consulting Engineer'. The Tribunal referred to a decision of the Hon'ble Gujarat High Court in a similar case involving Chartered Accountants and held that the services rendered by the professional are taxed, emphasizing the absence of professionally qualified persons in the respondent-firm to be considered as an engineering firm under Section 65(13). Consequently, the Tribunal upheld the finding that the respondents are not liable to Service tax on consulting engineers' services.

Furthermore, the Tribunal addressed the issue of the liability of Service tax under Section 65(25) concerning market research agency services. It was noted that there was no evidence on record to demonstrate that the respondent had conducted any market research. Referring to the Board's Circular dated 7-10-1998, which defines a 'market research agency' as a commercial concern engaged in conducting market research, the Tribunal concluded that the respondents did not fall within the purview of a market research agency to attract the levy of Service tax. The absence of material showing that the respondent assisted the companies from whom they received payments in selling their goods led to the rejection of the Service tax liability on market research agency services.

In conclusion, the Tribunal upheld the impugned order of the Commissioner (Appeals) and rejected the appeal, emphasizing the non-liability of the respondents to Service tax on consulting engineers' and market research agency services based on the interpretation of relevant provisions and absence of evidence supporting the tax imposition. The order was dictated and pronounced in open Court on 13-5-2005.