2007 (8) TMI 104 - AT - Service Tax

Consulting Engineer service - Department demand for service tax from appellant under CES but appellant contention is that they were neither qualified engineers nor were the firm of engineers providing any consultancy engineer service - Matter remanded for reconsideration

Summary

Issues:
1. Whether the appellant rendered service as a consulting engineer.
2. Whether the demand for service tax was time-barred.
3. Whether the appellant satisfied the statutory definition of a consulting engineer.

Issue 1:
The appellant, M/s. Ravi Paints & Chemicals Ltd., sought waiver of pre-deposit and stay of recovery of service tax, interest, and penalties under Section 78 of the Finance Act, 1994. The Commissioner, in the impugned order, found that the appellant had rendered taxable service as a consulting engineer. However, the appellant argued that they did not conform to the definition of a consulting engineer as per the agreement with Brilliant Coatings Pvt. Ltd. The Tribunal noted that the appellant had provided technical know-how and various services related to the manufacture of dry cement paints, indicating engineering consultancy services. The Tribunal directed the matter to go back to the Commissioner to examine whether the appellant satisfied the statutory definition of a consulting engineer before imposing any tax or penal liability.

Issue 2:
The appellant contended that the Show Cause Notice dated 20-5-2003, received on 15th March, 2004, was time-barred. The Joint Director of Revenue argued that the demand was not barred by limitation based on the agreement between the appellant and Brilliant Coatings Pvt. Ltd., which indicated the provision of consulting engineer services. The Tribunal did not conclusively address the limitation issue but directed the Commissioner to examine it upon remand.

Issue 3:
The Tribunal analyzed the agreement between the appellant and Brilliant Coatings Pvt. Ltd., which outlined the services provided, including technical know-how, testing of raw materials, quality control, and machinery maintenance. While the appellant disputed being classified as a consulting engineer, the Tribunal observed that the services rendered involved knowledge of engineering and appeared to be engineering consultancy. However, the Tribunal emphasized that the appellant must satisfy the statutory definition of a consulting engineer before any tax or penal liability could be imposed. The matter was remanded to the Commissioner for further examination, ensuring the appellant's right to be heard adequately.

This judgment highlights the importance of accurately determining whether a party satisfies the statutory definition of a particular service category, such as a consulting engineer, before imposing tax or penal liabilities. It also underscores the need for thorough examination of agreements and service provisions to establish the nature of services rendered and address any limitation issues effectively.