2015 (12) TMI 163 - AT - Service Tax

Demand of service tax - Consulting Engineer Service - Invocation of extended period of limitation - Held that - Assessee has a separate Engineering Wing which undertook supervision of the construction activities and charged an amount equal to 10% of the construction cost. - It is seen that the assessee provided designs with estimates and supervised the work of construction to ensure that the construction was in accordance with the design. Thus, it clearly rendered consultancy or technical assistance by way of formulating designs and so clearly fell within the scope of advice, consultancy or technical assistance in the field of civil engineering which is a discipline of engineering - normal period of one year covered the period from 01.04.2006 onwards for which the demand has been confirmed by the adjudicating authority. As stated earlier, the demand prior to 01.05.2006 is not sustainable and consequently the Revenue appeal against dropping of the demand for the extended period (beyond the normal period of one year) which was the period prior to 01.04.2006 becomes unsustainable on that count alone apart from the reasons given by the adjudicating authority that the assessee could not be held guilty of wilful misstatement or suppression of facts. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Whether the assessee is liable to pay service tax on supervision charges under Consulting Engineer Service.
2. Whether the extended period for service tax demand is invocable in the present case.
3. Interpretation of the definition of Consulting Engineer Service prior to 01.05.2006.
4. Sustainability of the demand for the period prior to 01.05.2006.
5. Validity of the Revenue's appeal against dropping the demand for the extended period.

Analysis:

1. The appeal was filed by the assessee against an order confirming a service tax demand for the normal period, while dropping the demand for the extended period. The assessee, engaged in construction activities, collected supervision charges but did not pay service tax on them. The contention was whether these charges constituted Consulting Engineer Service. The assessee argued that the supervision charges did not fall under this service category.

2. The Tribunal considered that the assessee provided designs, estimates, and supervised construction activities, rendering consultancy or technical assistance in civil engineering. The definition of Consulting Engineer Service was analyzed, and it was noted that a body corporate was not covered in the definition prior to 01.05.2006. Referring to a Delhi High Court judgment, it was established that the demand prior to 01.05.2006 was not sustainable. The demand confirmed by the adjudicating authority for the period from 01.04.2006 onwards was upheld, while the demand for the period before 01.05.2006 was considered unsustainable.

3. The Tribunal dismissed the Revenue's appeal against dropping the demand for the extended period, as the demand for the period prior to 01.05.2006 was deemed unsustainable. The assessee's appeal was allowed for remand, directing the re-computation of the demand for the period from 01.05.2006 to 31.03.2007. The adjudicating authority was instructed to re-determine penalties based on the recomputed demand, ensuring the appellant's right to be heard before the denovo adjudication order was passed.