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2014 (7) TMI 498 - AT - Service TaxConsulting engineer service - scope of taxable service - levy on body corporate - Held that - since the assessee is a company registered under the provisions of Companies Act, 1956, it falls outside the purview of the definition of consulting engineer in Section 65(31) , as the provisions stood during the relevant period 2001-03. It requires to be noticed that with effect from 1.5.2006, Section 65(31) was amended to bring within the ambit of the definition of consulting engineer , anybody corporate . Prior to 1.5.2006, consulting engineer is defined to mean any professionally qualified engineer or any other firm who either directly or indirectly renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. It is only with effect from 1.5.2006 that a body corporate comes within the ambit of consulting engineer service in Section 65(31). - therefore, respondent/assessee falls outside the purview of the definition consulting engineer , since it is a company registered under the Companies Act,1956, and the relevant period is 2001-03, prior to 1.5.2006 - Following decision of C.S.T., Bangalore vs. Turbotech Precision Engineering Pvt. Ltd. 2010 (4) TMI 344 - KARNATAKA HIGH COURT and C.C.E.& Service Tax vs. Simplex Infrastructure & Foundry Works 2013 (5) TMI 336 - DELHI HIGH COURT - Decided against Revenue.
Issues:
1. Appeal against order confirming service tax demand. 2. Scope of 'consulting engineer' service under Section 65(31). 3. Exclusion of reimbursement of expenses from taxable value. 4. Applicability of amendments to Section 65(31) from 1.5.2006. Issue 1: Appeal against order confirming service tax demand The appeal was filed by the Revenue against the order of the Commissioner (Appeals) confirming a service tax demand of Rs. 17,85,768/- on the grounds that the assessee provided 'consulting engineer' service during 2001-03, as defined in Section 65(31) read with Section 65(105)(g) of the Finance Act, 1994. The Revenue alleged that the assessee suppressed the gross consideration received for the taxable service in its returns, which came to light during a comparison with the income tax returns. Issue 2: Scope of 'consulting engineer' service under Section 65(31) The assessee contended that the consideration received for providing soil testing, survey work, and drilling survey to a specific entity fell outside the scope of 'consulting engineer' service. Furthermore, the assessee argued that amounts received as reimbursement of expenses should be excluded from the taxable value. The primary authority rejected these contentions, leading to the appeal. Issue 3: Exclusion of reimbursement of expenses from taxable value The Appellate Commissioner allowed the appeal, ruling that the services provided by the assessee, such as soil testing and survey work, did not fall under the 'consulting engineer' service. Additionally, as the services were rendered to principal consultants and not directly to clients, they were not liable to tax under 'consulting engineer' service. The Appellate authority also excluded reimbursement of expenses from the taxable value under Section 67 of the Act, resulting in the appeal being allowed in favor of the assessee. Issue 4: Applicability of amendments to Section 65(31) from 1.5.2006 The respondent argued that as a company registered under the Companies Act, 1956, it fell outside the definition of 'consulting engineer' during the relevant period of 2001-03. The respondent relied on decisions from the Karnataka and Delhi High Courts, which concluded that only from 1.5.2006 did a body corporate come within the ambit of 'consulting engineer' service under Section 65(31). Consequently, the respondent was held to be outside the purview of the definition of 'consulting engineer', leading to the dismissal of the Revenue's appeal. This comprehensive analysis highlights the key legal issues, arguments presented, and the decisions made in the judgment, providing a detailed understanding of the case.
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