2018 (6) TMI 199 - AT - Service Tax

Consulting Engineer Service - Body Corporate - non/short-payment of service tax - It has been alleged that the appellants have failed to pay service tax in terms of Section 68 at the rates specified under Section 66 of the Finance Act, 1994 within the time specified under Rule 6 of the Service Tax Rules, 1994 - whether the appellants being a body corporate are liable to pay duty as Chartered Engineer prior to the period 1.5.2006? - Held that - The definition of Consulting Engineering Service has been changed w.e.f. 1.5.2006. Prior to this date, the definition of Consulting Engineer means any professionally qualified engineer or any body corporate or any other firm who, either directly or indirectly renders any advice, consultancy or technical assistance in any manner to any person in one or more disciplines of engineering. With effect from 1.5.2006, 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. The appellants being a body corporate are liable to pay service tax as a Consulting Engineer only post 30.4.2006 whereas the demand pertains to the period 2000-01 and 2001-02. Maintainability of Question of law being raised at the appellate stage - Held that - The appellants are within their rights to raise their issue - also, the question of law being remanded back the case to the original adjudicating authority at this juncture would not serve any purpose other than prolonging the litigation on a squarely settled matter - Question of Law is maintained. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Alleged non-payment of service tax for the years 2000-01 and 2001-02.
2. Discrepancy in interpreting the definition of "Consulting Engineer Service."
3. Admissibility of legal arguments at the appellate stage.
4. Applicability of the decision in Turbotech Precision Engineering Pvt. Ltd.

Issue 1: Alleged non-payment of service tax for the years 2000-01 and 2001-02:
The case involved M/s. Net Pro Active Services Pvt. Ltd., accused of not paying service tax amounting to ?18,99,196 for 2000-01 and underpaying by ?10,04,517 for 2001-02. A show-cause notice was issued, leading to an Order-in-Original upholding the demands. The appellant contested this, citing evidence of tax discharge and procedural errors by the Commissioner.

Issue 2: Discrepancy in interpreting the definition of "Consulting Engineer Service":
The appellant argued that the definition of "Consulting Engineer Service" underwent a material change post-1.5.2006. They contended that as a body corporate, they were not liable to pay service tax as a "Consulting Engineer" before this date. Citing relevant case law, including the Turbotech Precision Engineering Pvt. Ltd. decision, they sought to establish their non-liability based on the pre-2006 definition.

Issue 3: Admissibility of legal arguments at the appellate stage:
The appellant raised legal questions at the appellate stage, challenging the duty liability based on the definition of "Consulting Engineer Service." The Revenue objected, stating that these arguments were not raised earlier. However, the Tribunal allowed the legal questions to be considered, citing precedents allowing pure questions of law to be entertained at the appellate stage.

Issue 4: Applicability of the decision in Turbotech Precision Engineering Pvt. Ltd.:
The Tribunal found that the issue of the appellant's liability to pay service tax as a "Consulting Engineer" was settled by the Turbotech Precision Engineering Pvt. Ltd. decision. Given that the appellant was a body corporate and the demand pertained to pre-2006, the Tribunal ruled in favor of the appellant, allowing the appeal and providing consequential relief.

In conclusion, the Tribunal's judgment addressed the alleged non-payment of service tax, the interpretation of the "Consulting Engineer Service" definition, the admissibility of legal arguments at the appellate stage, and the applicability of the Turbotech Precision Engineering Pvt. Ltd. decision. The ruling favored the appellant, considering the pre-2006 definition and settled legal principles, leading to the allowance of the appeal with consequential relief.