2010 (9) TMI 313 - AT - Service Tax

Refund Appellant-manufacturer also providing training to employee of customer who purchased goods from them - Commercial Coaching and Training Centre service - services brought into the tax net w.e.f.1-7-2003 - services of Erection, Installation and Commissioning would get covered under the category of Consulting Engineer Services but after the said services had been introduced as new services, the Board has clarified that it would not get covered under the Consulting Engineer services prior to that period - order is correct and does not require any interference. The appeal filed by the Revenue being devoid of merits is rejected

Issues Involved:

1. Taxability of services provided by the respondent as "Consulting Engineer" services.
2. Classification of training services provided by the respondent.
3. Refund claim of Service Tax paid by the respondent prior to July 1, 2003.
4. Interpretation of the term "Consulting Engineer" under the Finance Act, 1994.
5. Applicability of Board's Circulars and Tribunal decisions on the case.

Issue-Wise Detailed Analysis:

1. Taxability of Services Provided by the Respondent as "Consulting Engineer" Services:

The core issue was whether the services provided by the respondent, specifically training to the officers/employees of their customers, fell under the category of "Consulting Engineer" services. The Tribunal initially rejected the appeal by the Revenue, but the High Court of Karnataka remanded the matter back, directing the Tribunal to consider the taxability of the respondent's services on merits.

2. Classification of Training Services Provided by the Respondent:

The respondent was engaged in manufacturing Distribution Control System and Process Control Equipments and provided training to customers' employees. The Revenue argued that this training should be classified under "Consulting Engineer" services. However, the respondent contended that such training fell under the category of "Commercial Training and Coaching Centre," which was brought into the Service Tax net from July 1, 2003. The Tribunal found that the training provided was not in the nature of advice, consultancy, or technical assistance, but rather familiarization with the operation of the products sold, and thus did not fall under "Consulting Engineer" services.

3. Refund Claim of Service Tax Paid by the Respondent Prior to July 1, 2003:

The respondent filed a refund claim for the Service Tax paid under protest for the period before July 1, 2003. The Adjudicating Authority rejected this claim, but the first Appellate Authority allowed it, agreeing with the respondent's classification of services. The Tribunal upheld the first Appellate Authority's decision, stating that the introduction of a new category of services (Commercial Training and Coaching Centre) indicated that such services were not covered under the earlier category of "Consulting Engineer."

4. Interpretation of the Term "Consulting Engineer" Under the Finance Act, 1994:

The Tribunal examined the definition of "Consulting Engineer" under Sections 65(13) and 65(48)(g) of the Finance Act, 1994, which includes any advice, consultancy, or technical assistance provided by a professionally qualified engineer or engineering firm. The Tribunal concluded that the training provided by the respondent did not constitute technical assistance as envisaged by the definition, as it was more akin to product familiarization rather than consultancy or technical advice.

5. Applicability of Board's Circulars and Tribunal Decisions on the Case:

The Tribunal considered various Board's Circulars and previous Tribunal decisions. It noted that the CBEC Circular dated May 13, 2004, clarified that services of Erection, Installation, and Commissioning, when introduced as new services, would not fall under the category of "Consulting Engineer" services prior to their introduction. This rationale was applied to the current case, reinforcing that the training services provided by the respondent did not fall under "Consulting Engineer" services before July 1, 2003.

Conclusion:

The Tribunal concluded that the training services provided by the respondent were not taxable under "Consulting Engineer" services prior to July 1, 2003, and upheld the respondent's refund claim for the Service Tax paid under protest. The appeal filed by the Revenue was rejected as devoid of merits.

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