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2018 (7) TMI 617 - AT - Service TaxInterpretation of Statute - scope of Consulting Engineer Service - agreements with the Bihar State Electricity Board for providing consultancy services in connection with implementation of rural electrification in Bihar - levy of tax made applicable to Any Body Corporate or Any other Firm - disputed period is 15.12.2003 to 02.09.2004. Whether the service tax liability under the category of Consulting Engineer will be applicable to the appellant for the period prior to the amendment in the said definition w.e.f. 01.05.2006? Held that - Hon ble Karnataka High Court in the case of Tata Consultancy Services 2004 (7) TMI 664 - KARNATAKA HIGH COURT as well as the Hon ble Calcutta High Court in the case of M.N.Dastur and Co. Ltd 2005 (2) TMI 11 - HIGH COURT (CALCUTTA) have discussed the precise issue in length and have concluded that the definition of Consulting Engineer for the period prior to subject amendment w.e.f. 01.05.2006 will cover within its ambit, Company as much as individual - the definition of Consulting Engineer will include the appellant for the period prior to 01.05.2006 also and hence during the disputed period appellant will be liable to payment of service tax. Penalty - Held that - The appellant is a Government of India Undertaking and it cannot be said that the non-payment of service tax was on account of willful misstatement or suppression on the part of the appellant - penalty not warranted. Appeal allowed in part.
Issues:
- Whether service tax liability under the category of "Consulting Engineer" is applicable to the appellant for the period prior to the amendment in the definition. - Whether penalties imposed on the appellant under the Finance Act, 1994 should be upheld. Analysis: 1. The appellant, a company engaged in inter-state transmission of electricity and a Government of India Undertaking, entered into agreements with the Bihar State Electricity Board for consultancy services. The department demanded service tax of ?1,26,47,105 for the period from 15.12.2003 to 02.09.2004, which the appellant challenged in the appeal. 2. The appellant argued that prior to the amendment in the definition of "Consulting Engineer" w.e.f. 01.05.2006, no service tax was leviable. They relied on precedents like Commr. Of Central Excise & Service Tax vs. Simplex Infrastructure & Foundry Works to support their claim. 3. The department defended the impugned order, citing decisions like Tata Consultancy Services vs. Union of India, stating that the service tax levy under "Consulting Engineer" is applicable without distinction between "Firm" and "Company". 4. The Tribunal considered the definition of "Consulting Engineer" before the amendment, which included "professionally qualified engineer or an engineering firm". Precedents like Simplex Infrastructures Ltd. favored the appellant's stance, indicating that a company could be included under the definition. 5. Referring to the judgments in Tata Consultancy Services and M.N.Dastur and Co. Ltd., the Tribunal concluded that the definition of "Consulting Engineer" encompassed companies as well as individuals before the amendment. The intent of the legislature was to charge service tax on consulting engineers, regardless of their form. 6. Consequently, the Tribunal held that the appellant, being a Government of India Undertaking, was liable to pay service tax for the disputed period. However, the penalties imposed on the appellant were set aside under Section 80 of the Finance Act, 1994, as there was no willful misstatement or suppression on their part. 7. The impugned order was modified, and the appeal was partly allowed, with the decision pronounced in the Open Court on 4.5.2018.
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