Tribunal Upholds Decision on Service Tax for Consulting Engineer Services

The Tribunal upheld the Commissioner (Appeals)'s decision and dismissed the Revenue's appeal against the service tax demand on Consulting Engineer Services, recognizing the service as part of a works contract. The Tribunal relied on the Supreme Court's rejection of the department's appeal in a similar case, emphasizing the finality of its decision and settling the issue of service tax applicability in works contracts.

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Issues:
Appeal against service tax demand on Consulting Engineer Services; Nature of service under works contract; Tribunal's decision in Daelim Industrial Co. Ltd. v. CCE; Dismissal of department's appeal by Supreme Court.

Analysis:
The appeal before the Appellate Tribunal CESTAT Chennai involved a dispute over a service tax demand on what was initially perceived as "Consulting Engineer Services" provided by the assessee. The Commissioner (Appeals) overturned the demand, recognizing the service as part of a works contract with CMC Hospital, Vellore, rather than a consultancy contract. The Commissioner held that a works contract cannot be dissected for the purpose of levying service tax on a portion of it, citing the Tribunal's decision in Daelim Industrial Co. Ltd. v. CCE [2003] 155 ELT 457 (T). The Revenue's appeal primarily contested the Tribunal's decision in Daelim Industrial Co. Ltd., arguing that the matter was sub judice as the department had appealed to the Supreme Court against that decision.

The Tribunal dismissed the Revenue's appeal, noting that the Supreme Court had already rejected the department's appeal in S.L.P. No. 24294/2003 concerning the Daelim Industrial Co. Ltd. case. The Supreme Court's order, which was produced during the proceedings, confirmed the dismissal of the special leave petition on its merits. Consequently, the Tribunal upheld the Commissioner (Appeals)'s decision and rejected the Revenue's appeal against the service tax demand. The judgment underscores the finality of the Tribunal's decision in light of the Supreme Court's dismissal of the department's appeal, settling the issue of the nature of the service provided under a works contract and the applicability of service tax in such cases.

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