2006 (1) TMI 1 - AT - Service Tax

(i)..Penalty for non registration centralized or decentralized.. (ii) Scope of the word firm (iii) Repair and Maintenance of software is service of consulting engineer etc.

Issues Involved:
1. Jurisdiction of the Commissioner of Central Excise, Delhi.
2. Definition and scope of "Consulting Engineer" under Section 65(18) of the Finance Act, 1994.
3. Nature of services provided by the appellant and their classification under taxable services.
4. Exemption applicability under Notification No. 4/99-ST, dated 28-2-99.
5. Validity of the demand and penalties imposed.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner of Central Excise, Delhi:
The appellant contested the jurisdiction of the Commissioner, arguing that services rendered outside Delhi should not fall under the Delhi Commissionerate's purview. The Tribunal upheld the jurisdiction, noting that the appellant's registered office and centralized billing were in Delhi. Rule 4 of the Service Tax Rules, 1994, allows centralized registration where centralized billing is done. The Tribunal found that the Delhi Commissionerate had the authority to issue the show cause notice and adjudicate the matter, as the services were billed and managed from Delhi.

2. Definition and Scope of "Consulting Engineer" under Section 65(18):
The appellant argued that being a company, it did not fall within the definition of a "consulting engineer," which they claimed applied only to individuals or firms. The Tribunal rejected this argument, citing precedents (Tata Consultancy Services v. Union of India, M.N. Dastur & Company Ltd. v. Union of India) that a company can be a consulting engineer if it provides engineering services through qualified engineers. The Tribunal emphasized that the term "firm" in the definition includes companies.

3. Nature of Services Provided by the Appellant and Their Classification:
The Tribunal examined the contracts and services provided, such as system design, installation, supervision, training, consultancy, and technical assistance. It concluded that these services fell under "consulting engineer" services. The Tribunal noted that services like software support, operation and maintenance assistance, help desk services, and emergency support were technical assistance services and thus taxable. However, it upheld the Commissioner (Appeals)'s decision to exclude installation, erection, and commissioning services from the taxable category based on a circular dated 13-5-2004.

4. Exemption Applicability under Notification No. 4/99-ST, dated 28-2-99:
The appellant claimed exemption for software support services under this notification. The Tribunal agreed that the exemption applied from 28-2-99 onwards but not for the period before this date. It directed the Commissioner (Appeals) to reduce the taxable value of software support services accordingly.

5. Validity of the Demand and Penalties Imposed:
The Tribunal upheld the demand and penalties imposed by the Commissioner (Appeals), except for adjustments related to the exemptions and specific service classifications. It directed the Commissioner (Appeals) to verify the exact amount related to hardware repair services, which should be reduced as per the specific terms of the contract (59% of the price of new units).

Final Order:
The Tribunal upheld the decision of the Commissioner (Appeals) with modifications:
1. Reduce the taxable value of software support services for the period covered by the exemption notification from 28-2-99 to December 2000.
2. Verify and reduce the taxable value of hardware repair services as per the contract terms.
The appeal was dismissed on all other counts, and the Commissioner (Appeals) was directed to expedite the recalculations within two months.

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