2008 (9) TMI 43 - AT - Service Tax

Present SCN stand issued on 14.10.02 for the period 20.08.97 to 05.11.01, invoking larger period - It is seen that prior to present SCN, appellants were issued another SCN on 23.08.02 raising demand on the ground that installation, erection charges are liable to be included in the A.V. since revenue was aware of the activity of installation and erection, when the first SCN was issued, second SCN on same facts, could not be taken as suppression of facts - hence demand is time barred

Summary

Issues:
1. Whether supervision of erection and commissioning of machinery at the customer's site falls under the category of consulting engineering services for service tax liability.
2. Whether the supervision charges for installation and commissioning of plant can be considered as consulting engineers' services.
3. Whether the longer period of limitation applies in the case of a show cause notice issued for the period 20.08.97 to 05.11.01.

Analysis:
1. The dispute in the present appeal revolves around whether the supervision of erection and commissioning of machinery at the customer's site should be categorized as consulting engineering services, thereby attracting service tax liability. The Commissioner (Appeals) noted that the supervision of erection and commissioning requires skills based on engineering knowledge and falls under the purview of Consulting Engineers. Citing a case from the Calcutta High Court, it was argued that such supervision services fulfill the essential elements of Consulting Engineers. However, the Tribunal referred to precedents where it was held that supervision charges for installation and commissioning of plant do not fall under Consulting Engineers. Ultimately, the Tribunal ruled in favor of the appellants, setting aside the impugned order and granting relief.

2. The Tribunal referenced previous cases to establish that supervision charges for installation and commissioning of plant cannot be classified as Consulting Engineers' services. It was pointed out that providing technical assistance does not necessarily equate to offering consulting engineering services. The Tribunal emphasized that technical services encompass advice, consultancy, and technical assistance, distinct from other additional services. This analysis led to the conclusion that the appellants, primarily manufacturers of goods, cannot be considered an engineering firm providing consulting engineering services.

3. Regarding the issue of the longer period of limitation, the Tribunal highlighted that the show cause notice was issued for a period beyond the usual limitation period. However, it was argued that since the Revenue was aware of the installation and erection activities when the first show cause notice was issued, the subsequent notice could not be deemed as suppression of facts. Citing decisions from the Hon'ble Supreme Court, it was concluded that the demand based on the second show cause notice should be considered barred by limitation. The Tribunal noted that the Revenue was well-informed about the activities of the appellant, who was a registered unit with the Central Excise department and regularly cleared goods after paying duty.

In summary, the judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the issues of categorizing supervision of erection and commissioning as consulting engineering services, the classification of supervision charges for installation and commissioning, and the applicability of the longer period of limitation in a show cause notice scenario. The Tribunal ruled in favor of the appellants on all counts, setting aside the impugned order and providing consequential relief.