2008 (11) TMI 146 - AT - Service Tax

Architect - valuation of property demand under head consulting engineer services - proprietor is an architect and not a qualified engineer - only services provided by a professionally qualified engineer is covered by the consulting engineer service - If service receivers find the consultation acceptable given by a non-qualified engineer, it would not mean that service tax is payable on such service. The basic requirement is that service should have been provided by a professionally qualified engineer

Summary

Issues:
- Appeal against decision of Commissioner (Appeals) confirming demand of service tax for consulting engineer services provided by an architect.
- Interpretation of whether consulting engineer services cover services provided by a professionally qualified engineer only.
- Application of Trade Notice No. 1/98-ST and distinction between engineering and architecture disciplines in determining tax liability.

Analysis:
1. The appeal was filed by the Revenue against the decision of the Commissioner (Appeals) regarding the demand of service tax from the respondent for providing consulting engineer services by an architect. The Original Adjudicating Authority had confirmed the demand with interest and penalty. The Revenue argued that even though the service provider was an architect and not a qualified engineer, the service required engineering knowledge for property valuation, justifying the tax demand. On the other hand, the respondent's advocate cited a Trade Notice stating that architects are not covered under the services provided by consulting engineers, emphasizing the distinction between engineering and architecture as separate disciplines. The Commissioner (Appeals) ruled that consulting engineer services only apply when immovable property valuation is done by a professionally qualified engineer, which was not the case in this situation.

2. The Tribunal, after hearing both sides, found the Commissioner (Appeals)' decision logical. It emphasized that consulting engineer services cover only those provided by a professionally qualified engineer, not by individuals like architects. The Tribunal highlighted that the Trade Notice mentioned by the Dy. Commissioner supported this interpretation, stating that engineering and architecture are distinct professions. Therefore, in this case where the service was provided by an architect and not a qualified engineer, the service tax liability was not applicable. The Tribunal rejected the Revenue's appeal, affirming that the service should have been provided by a professionally qualified engineer to fall under consulting engineer services for tax purposes.

This judgment clarifies the scope of consulting engineer services under the service tax regime, emphasizing the requirement for services to be provided by a professionally qualified engineer to attract tax liability. It also underscores the importance of considering professional qualifications and disciplines in determining tax obligations, as highlighted by relevant trade notices and educational councils.