2007 (6) TMI 40 - AT - Service Tax

Consulting Engineer - Revenue contended that appellant activity of undertaking various turnkey projects is covered under the category of Consultancy Engineer and accordingly liable for service tax - Held that revenue contention is not correct and set aside the demand

Summary

Issues:
- Confirmation of demand for Service tax on the appellant company for collecting "Annual Maintenance Contract charges"
- Interpretation of the nature of work undertaken by the appellant company under turnkey projects and its categorization under 'Consultancy Engineer' for levying Service tax

Analysis:
1. The appeal arose from the confirmation of demand for Service tax on the appellant company for collecting "Annual Maintenance Contract charges." The appellant argued that they were not providing consulting services or technical advice but were working under a turnkey contract for various project activities. The authorities categorized the work under 'Consultancy Engineer' for Service tax purposes, despite the appellant's reliance on Tribunal judgments supporting their position.

2. The appellant contended that the authorities should have followed Tribunal rulings on similar issues, emphasizing the decision in the case of Daelim Industrial Co. Ltd. v. CCE, Vadodara. The appellant highlighted that the Tribunal had explicitly held that work contracts like turnkey projects were not liable to Service tax under the category of "Consulting Engineer." Reference was made to similar rulings in cases like Rolls Royce Industries Power (I) Ltd. v. CCE, supporting the appellant's position.

3. The Tribunal, after considering the submissions, found that the appellant's work order was akin to the one analyzed in the Daelim Industrial Co. Ltd. case. The Tribunal reiterated that Service tax was not applicable on turnkey contracts concerning Consulting Charges, as established in previous rulings. Consequently, the Tribunal set aside the impugned order, allowing the appeal and providing for consequential relief, if any. The decision was based on the consistent application of the Tribunal's ratio in similar cases.

4. The judgment highlighted the importance of applying established legal precedents and Tribunal rulings in determining the tax liability of companies engaged in turnkey projects. By aligning with past decisions and emphasizing the specific nature of the appellant's contract work, the Tribunal overturned the demand for Service tax, emphasizing the need for authorities to adhere to judicial interpretations and precedents in tax matters.