2005 (2) TMI 651

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..... a foreign firm, M/s. SNC Lavalin, Montreal, Canada, as a consulting engineer. He also confirmed to penalty imposed by the lower authority. Hence this appeal. 2. Heard both sides. 3. Services rendered by a consulting engineer were brought into service tax net with effect from 7-7-97. There is no dispute that the above named foreign company provided consulting engineering services to the appellant. The period of dispute is August 1998 to September 2002. We are not going into the various services provided by the foreigner. Suffice it to say that they fall in the category of taxable service under Finance Act, 1994. 4. The agreement entered into between the parties clearly provides in the contract for Consultants Services in C .....

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..... od prior to 16-8-2002 envisages three persons, i.e. the service provider, his agent or authorised person and the service receiver. In the present case, K.S.E.B. cannot be considered as an agent of SNC Lavelin, Canada for the simple reason that the former is a service receiver not an agent of the foreign company. K.S.E.B. also cannot be considered as an authorised person on behalf of the foreign company for the reason that K.S.E.B. does not represent the foreign company in India. K.S.E.B. merely discharges tax liabilities accruing out of the payments made to the foreign company in terms of the payment terms enumerated in the contract. Tax deductions at source is prescribed under Income-tax Act whereas no such condition to deduct tax at sourc .....

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..... to the personnel of SNC Lavalin with security, technical, secretarial and administrative support staff services, etc. Thus under the contract, K.S.E.B. provides all facilities for the benefit of the foreign service provider. It is foreign service provider's office as the clause refers to 'SNC Lavalin Personnel'. Such an office cannot be held to be the office of K.S.E.B. just to demand service tax from the appellant after 16-8-2002. The demand should have been made on SNC Lavalin, the service provider who has an office in India instead of on K.S.E.B. holding that the foreign service provider has no office in India. 7. Thus we observe that prior to 16-8-2002, service tax cannot be demanded from the appellant as he is not held to be an a .....

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