2006 (5) TMI 26 - AT - Service Tax

Service Tax Consulting Engineer Appellant as a society registered under Societies Act and carried out activity of testing various instruments are not covered under consulting engineer Not liable to service tax

Summary

Issues:
1. Whether the appellant, a society registered under Societies Act, is liable to pay service tax under the category of 'consulting engineer' for testing various instruments.

Analysis:
The appellant, a society under the Ministry of Power, Government of India, challenged the imposition of service tax under the 'consulting engineer' category. The appellant argued that they do not provide professional engineering advice, consultancy, or technical assistance as defined in the Finance Act. The Counsel contended that the appellant's main function is to offer technical testing facilities, not consulting engineer services. Reference was made to precedents where similar activities were not considered consulting engineer services. The appellant also highlighted the incorrect confirmation of demands by the Commissioner for bills from different research stations. The Counsel argued against the imposition of penalties, citing relevant judgments and circulars exempting testing services from taxation.

The learned SDR relied on a judgment involving Tata Consultancy Services. However, upon careful consideration, the Tribunal noted that the definition of 'consulting engineer' under Section 65(13) requires services to be provided by an engineering firm, which the appellant, being a society, did not qualify as. The Tribunal distinguished the case from Tata Consultancy Services, where advisory and consultancy services were provided, unlike in the present case where only testing and reporting were conducted. The Tribunal referenced previous judgments to support the argument that services like 'Scientific and Technical Consultancy Services' do not fall under 'Consulting Engineer Services.' The Tribunal also cited a Board Circular exempting public funded research institutions from service tax if no services are rendered. Consequently, the Tribunal accepted the appellant's contention, setting aside the impugned order and allowing the appeals.

The Tribunal's decision was based on the clear distinction between the activities of the appellant society and the definition of 'consulting engineer' under the Finance Act. By emphasizing the lack of advisory or consultancy services provided by the appellant and referring to relevant precedents and circulars, the Tribunal concluded that the appellant's testing activities did not fall within the scope of 'consulting engineer' services, leading to the setting aside of the service tax imposition.