2007 (4) TMI 24 - AT - Service Tax

Consulting Engineer Service Alleged that appellant is providing the service of Consulting Engineer Service and liable to pay the service tax Held that the activity of appellant is servicing is not covered under said services and accordingly not liable to pay tax

Summary

Issues:
1. Whether the service charges received by the appellants for servicing weaving looms constitute taxable Service Tax under the category of "Consulting Engineer's Service."

Analysis:
1. The lower authorities demanded Service Tax of Rs. 14,000 from the appellants for service charges received from clients for servicing weaving looms. The appellants argued that the servicing of machines does not fall under the definition of "Consulting Engineer" as per the Finance Act. The technicians involved were not professionally qualified engineers, and no evidence was presented to show they provided consultancy, advice, or technical assistance as required by the Act.

2. The show cause notice was based on an audit report that did not specify if the technicians were qualified engineers or provided consultancy services. The original and appellate authorities failed to determine if the technicians qualified as "Consulting Engineers" under the Act, which requires the provision of advice, consultancy, or technical assistance in engineering disciplines.

3. The Commissioner (Appeals) wrongly interpreted "technical assistance" to include physical work like servicing. However, technical assistance should be construed in line with advice and consultancy, which do not involve physical work. Since the technicians were not proven to be professionally qualified engineers, their services did not fall under the "Consulting Engineer" category as defined by the Finance Act.

4. The Tribunal concluded that the servicing by the appellant's technicians did not constitute "Consulting Engineer's Service" as it did not involve advice, consultancy, or technical assistance. Therefore, the demand for Service Tax and penalties were set aside, and the appeal was allowed.

This judgment clarifies the scope of "Consulting Engineer's Service" under the Finance Act and emphasizes the need for professionally qualified engineers providing advice, consultancy, or technical assistance to be considered taxable under this category.