2014 (10) TMI 26 - AT - Service Tax

Consulting engineering service - Penalty u/s 78 - Held that - As per the Section 65(31) of the Finance Act, 1994 Consulting Engineer means any professionally qualified engineer or an engineering 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 . In the present case, it is seen that the appellant had undertaken the inspection of the equipment and given suggestions to their client for improving the efficiency. Inspection of equipment does not come under the category of Consulting Engineers Service and this Tribunal in the case of MRF Ltd. case (2004 (10) TMI 10 - CESTAT (CHENNAI)) has held that such activity would come under scientific and technical consultancy service . Further it is seen that the Consulting Engineers Service rendered by body corporate and other firms came under the taxable net only with effect from 18-5-2006. Prior to that date the service tax levy applied only to services rendered by a professionally qualified engineer or engineering firm. The appellant is a manufacturer of excisable goods and therefore, it cannot be said that the appellant is an engineering firm rendering engineering consultancy - Decided in favour of assessee.

Summary

Issues: Liability to pay service tax on services rendered under the category of "Consulting Engineers Service."

Detailed Analysis:

Issue 1: The appellant received a sum for inspection of furnaces and heat treatment machines, leading to a service tax demand. The department classified the service as "Consulting Engineers Service" and imposed penalties. The appellant contended they were not an Engineer or Engineering firm providing such services.

Analysis: The Revenue argued that the appellant's activity constituted "Consulting Engineers Service," justifying the tax demand. The appellant highlighted legal amendments, stating that prior to a specific date, service tax was applicable only when services were provided by Engineers or Engineering firms. The appellant emphasized they were a body corporate and not liable for service tax before the amendment date.

Issue 2: The Tribunal examined the definition of "Consulting Engineer" under the Finance Act, 1994, and the nature of services provided by the appellant. It was crucial to determine whether the appellant's activities fell under the category of "Consulting Engineers Service."

Analysis: The Tribunal found that the appellant's inspection of equipment and suggestions for improvement did not align with "Consulting Engineers Service." Referring to precedents, the Tribunal noted that such activities were classified as "scientific and technical consultancy service." The Tribunal emphasized that the tax liability for services by "body corporate and other firms" was effective from a specific date, excluding the appellant's liability before that amendment.

Conclusion: The Tribunal concluded that the appellant was not liable for service tax under the category of "Consulting Engineers Service" for the services provided. The appellant's manufacturing nature and the nature of services rendered did not meet the criteria for such taxation. Therefore, the appeal was allowed, providing relief to the appellant as per the law.

Judgment: The Tribunal ruled in favor of the appellant, stating they were not liable for service tax concerning the services provided, rejecting the classification under "Consulting Engineers Service" and allowing the appeal with any consequential relief as per the law.