2003 (11) TMI 2 - AT - Service Tax

Service Tax Consulting Engineer (1) Valuer of immovable property (2) Imposition of penalty

Summary

Issues:
1. Whether services rendered by the respondent as a Valuer of immovable property are liable to pay service tax as a Consulting Engineer.

Analysis:
The appeal was filed by the Revenue against an order passed by the Commissioner of Central Excise & Customs (Appeals), Bangalore, concerning the liability of service tax on services rendered by a valuer of immovable property. The main contention was whether valuation of immovable property should be considered as advice in the nature of 'engineering advice' and thus be categorized under the definition of a 'consulting engineer' as per the Finance Act, 1994. The Revenue argued that based on a decision by the Madras High Court, services rendered by professionally qualified engineers, such as valuers of plant and machinery, should be considered as 'taxable services' falling under the purview of service tax laws. The Madras High Court's decision emphasized that advice given by an engineer based on engineering knowledge should be seen as part of the 'engineering discipline,' even in the context of immovable property valuation. Therefore, the Tribunal accepted the Revenue's plea and held that the services provided by the appellant as a valuer of immovable property are indeed liable to pay service tax as a consulting engineer under the Finance Act, 1994.

Regarding the penalty imposed, the Tribunal noted that while the original authority had dropped the penalty along with the service tax due to the belief that the activity did not amount to a taxable service, the Tribunal's decision on the liability of service tax also impacted the penalty aspect. The Tribunal acknowledged that penalties should be imposed judiciously, considering the circumstances of each case. Therefore, despite upholding the imposition of penalty due to the service tax liability, the Tribunal found the quantum of penalty to be excessive. Following the discretionary power available to the authorities in penalty imposition, the Tribunal decided to reduce the penalty amount from the original sum to a more reasonable figure. Consequently, the penalty was reduced to Rs. 5,000 from the initial penalty of Rs. 16,298, while upholding the rest of the original authority's order. The Department's appeal was disposed of with the above modifications.

In conclusion, the Tribunal's decision clarified that services provided by a valuer of immovable property are subject to service tax as a consulting engineer under the Finance Act, 1994, based on the interpretation of 'engineering advice' and the 'engineering discipline' as outlined in relevant legal precedents, such as the decision of the Madras High Court. The penalty imposed was reduced due to the excessive quantum, emphasizing the discretionary power of authorities in penalty imposition based on the facts and circumstances of each case.