2005 (1) TMI 3 - AT - Service Tax

Service Tax Technical manpower merely supplied for working in leasing organizations and Consultancy Engineering Service not provided Service tax not to be paid

Summary

Issues:
1. Whether the appellant was providing "Consultant Engineering Service" or only manpower supply.
2. Whether service tax was payable on the receipts from the Consultancy Service provided by the appellant.

Analysis:
1. The case involved a demand for service tax of approximately Rs. 93 lakhs from the appellant, a division of a company. The impugned orders concluded that the appellant was engaged in providing "Consultant Engineering Service" to clients, thus liable for service tax. However, the appellant contended that they were solely involved in supplying technical manpower due to surplus resources, not in Engineering Consultancy Service. The appellant's counsel highlighted specific contractual terms, such as providing engineers/technicians for tasks directed by the client, to support their argument. They emphasized that the appellant and its employees were not engaged in consultancy services. Additionally, the counsel pointed out that service tax was paid whenever actual Consultancy Service was provided, as per the definition of "Service" under Section 65(11).

2. Upon reviewing the records and hearing the arguments, it was observed that the appellant had supplied technical manpower to work under the client's instructions, as outlined in the contracts. The Tribunal noted examples like maintenance and servicing work, and supply of engineers, technicians, and operators, which did not involve rendering consultancy services. Consequently, the Tribunal found that the appellant's activities did not align with providing Consultancy Engineering Service, leading to the dismissal of the service tax demand. The impugned orders were set aside, and the appeal was allowed, ruling in favor of the appellant.