2012 (7) TMI 254 - AT - Service Tax

Demand of service tax - consulting engineers service - payments made to the foreign consultant - services having been provided before 18.04.06 Held that - no clear findings given by adjudicating authority in spite of all relevant documents presented before him. Law has undergone evolution. Authority should be very specific to bring out what was the activity carried out, nature of same. Matter remanded.

Summary

Issues:
1. Taxability of 'drawing and designing charges' under 'consulting engineers service'
2. Taxability of 'training fees' under 'consulting engineers service'
3. Time-barred demand issue

Analysis:

Issue 1: Taxability of 'drawing and designing charges' under 'consulting engineers service'
The appeal dealt with the taxability of 'drawing and designing charges' under the category of 'consulting engineers service.' The adjudication stemmed from a contract between the appellant and a foreign consultant for setting up a plant. The terms of the contract, including activities like training and technical services, were documented. The appellant argued that services provided before a specific date should not incur liability, citing a Supreme Court decision. The dispute was narrowed down to this issue, focusing on the nature of activities carried out by the foreign consultant and their tax implications. The Tribunal found no dispute regarding the exemption of certain services and ordered relief for the appellant on those counts.

Issue 2: Taxability of 'training fees' under 'consulting engineers service'
Regarding the taxability of 'training fees' under 'consulting engineers service,' the Tribunal expressed dissatisfaction with the examination conducted by the Adjudicating Authority. The order was deemed cryptic and lacking clarity, leading to a remand of the matter. The Tribunal instructed a fair opportunity for the appellant to present its defense fully and for the authority to issue a reasoned and clear order after a thorough examination. Emphasis was placed on the evolving nature of the law concerning Consulting Engineering Service and the need for specificity in determining the nature of activities and their tax implications.

Issue 3: Time-barred demand issue
The third issue revolved around whether the demand was time-barred. The Tribunal's decision to remand part of the appeal for fresh examination indicated a willingness to address all legal defense pleas and controversies surrounding the matter. By allowing the appeal in part and disposing of Cross Objections, the Tribunal aimed to ensure a comprehensive and fair review of the issues at hand, emphasizing the importance of detailed and well-reasoned decisions in tax matters.

In conclusion, the judgment highlighted the significance of clear and thorough assessments in determining tax liabilities under specific service categories, emphasizing the need for detailed documentation and a comprehensive understanding of the contractual terms to make informed decisions.