2006 (1) TMI 36 - AT - Service Tax

Service Tax Consulting Engineer Services received by the appellants were not liable to service tax, it becomes immaterial whether technical know-how received by them falls under the category of consulting engineers or not

Summary

Issues:
1. Liability of the appellants to pay service tax on services received from Consulting Engineer.
2. Interpretation of the category of services received by the appellants.
3. Impact of the Tribunal's previous decision on the liability of the service receiver.

Analysis:

1. The appellants were issued a show cause notice demanding service tax on the services of Consulting Engineer received by them during a specific period. The Dy. Commissioner confirmed the demand and imposed a penalty, stating that the services received fell under the category of Consulting Engineers, making the appellants liable for service tax payment. However, the Commissioner (Appeals) held that although the services received were categorized as Consulting Engineers' services, the appellants, as the service receiver, were not liable to pay service tax.

2. The Revenue filed an appeal challenging the Commissioner (Appeals) order, contending that the appellants should be liable to pay service tax as the service receiver. The appellants, on the other hand, argued that they were paying royalty for the transfer of technical know-how, which did not constitute services of Consulting Engineers. The Tribunal referred to a previous Final Order where it was established that during the relevant period, only the service provider was liable to pay service tax, not the service receiver. Therefore, the Tribunal upheld the Commissioner (Appeals) decision and dismissed the Revenue's appeal, emphasizing that the liability to pay service tax rested with the service provider, not the receiver.

3. The Tribunal reiterated that based on its previous decision, the appellants were not liable to pay service tax as the service receiver, regardless of whether the received services were categorized as Consulting Engineers' services or not. Therefore, the appeal was deemed infructuous, and it was dismissed accordingly.

In conclusion, the judgment clarified the liability of the service provider to pay service tax, absolving the service receiver from such obligations based on the Tribunal's earlier ruling. The categorization of services as Consulting Engineers' services was deemed irrelevant in determining the appellants' liability, ultimately leading to the dismissal of the appeal.