2011 (2) TMI 562 - AT - Service Tax

Demand - Consulting Engineer service - respondent provided service of installation and commissioning of machinery to various customers during the period 1-4-1997 to 31-3-2000 - Held that - the Board vide circular dt. 13-5-2004 clarified that prior to 1-7-2003 the installation and commissioning are not covered under the category of consulting engineer service . This circular was not brought to the notice of the Tribunal in the case of Transformers & Electricals Kerala Ltd. (2007 -TMI - 2922 - CESTAT BANGALORE). - Decided in favor of assessee.

Summary

Issues:
1. Classification of activity as 'Consulting Engineer service'
2. Tax liability on commission received for liaison activity

Classification of activity as 'Consulting Engineer service':
The appeal was filed by the Revenue against the order of the Commissioner (Appeals) who held that the activity undertaken by the respondent did not fall under the category of 'Consulting Engineer service'. The Revenue argued that the installation and commissioning of machinery by the respondent required technical assistance, making it qualify as 'consulting engineer service'. They cited a Board's Circular and a previous Tribunal decision in support of their argument. The respondent, on the other hand, contended that the installation and commissioning services were not covered under 'consulting engineer service' as per a Circular issued by CBEC. The Tribunal noted that the Circular clarified that installation and commissioning were not considered 'consulting engineer service' before a certain date. As this Circular was not considered in the previous Tribunal decision cited by the Revenue, the Tribunal found no merit in the Revenue's case and ruled in favor of the respondent.

Tax liability on commission received for liaison activity:
Regarding the commission received by the respondent for liaison activity provided to a foreign client, the Revenue argued that it should be subject to service tax. However, the respondent maintained that this commission was for liaison activity provided abroad and thus qualified as an export of service, exempt from service tax. The Tribunal agreed with the respondent, stating that the service provided to the foreign client fell under the category of export of service, and therefore, upheld the decision of the Commissioner (Appeals) that the service was not liable for service tax. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it.