2016 (11) TMI 196 - AT - Service Tax

Scope of erection, installation and commissioning service - is service covered under consulting engineers service? - CBEC vide Circular No.79/9/2004-ST dated 13.05.2004 - Held that - the score of taxation is examined from the activity described by investigation. Boards circular is candid on the scope of the taxing entry. Further, when a taxing entry was not in statue book, proposition for taxing erection, installation and commissioning service during the material period does not arise. Therefore, adjudication order has no leg to stand. Accordingly, the appeal is allowed.

Summary

Issues:
Interpretation of service provided by the appellant for the period 01.04.1998 to 30.06.2003 - Whether it falls under Consulting Engineers Service or the scope of erection, installation, and commissioning services.

Analysis:
The appellant argued that the service provided by them involved the physical activities of erection, installation, and commissioning of Textile Machineries. They contended that the service should not be classified as Consulting Engineers Service, as misconstrued by the appellate authority. The appellant referenced a CBEC circular clarifying that charges for erection, installation, and commissioning are not covered under consulting engineer services. They highlighted that these services came under a separate taxable category and were beyond the scope of consulting engineers services. The appellant further emphasized that since the service provided was before the introduction of the taxing entry for erection, installation, and commissioning services, it should not be subject to levy.

The revenue relied on the appellate order's analysis of the appellant's activities to support their argument. However, the tribunal examined the show cause notice and the investigation findings to determine the nature of the service provided. They also considered the CBEC circular's clarification on the taxing entry scope. The tribunal concluded that since the taxing entry for erection, installation, and commissioning services was not in effect during the material period, there was no basis for levying tax on the appellant's services. Therefore, the adjudication order was deemed invalid, and the appeal was allowed.