2014 (8) TMI 707 - AT - Service Tax

Appellate Tribunal rules in favor of appellants, setting aside service tax demand. Services not consulting, no tax evasion.

M/s. MP. Laghu Udhyog Nigam Ltd. Versus CCE, Bhopal

The Appellate Tribunal ruled in favor of the appellants, setting aside the service tax demand. It was determined that the services provided did not fall ... Consulting Engineer Service - Collection of supervision charges - construction of Navodaya Vidyalaya building - Held that:- There is not even a single line describing as to what is the actual services rendered by the appellants which are sought to be covered under the Consulting Engineer Service. This itself arguably can to be fatal. It is further seen from the agreement between Navodaya Vidyalaya Samiti and the appellants that the appellants were engaged for execution of works based on the architectural drawings, specification etc. given by the Samiti or their consultants. The agreement also states that the appellants would be entitled to supervision charges for supervision of the works done by contractors engaged by the appellants. These supervision charges are sought to be taxed under the Consulting Engineer Service. A company or body corporate was not covered in the scope of ‘Consulting Engineer’ before the amendment to the definition of Consulting Engineer with effect from 01.05.2006. It is seen that the demand period involved in the present appeal is prior to 01.05.2006. Thus, the appellants being a company or body corporate were outside the ambit of Consulting Engineer during the relevant period and consequently the service rendered by them was outside the scope of Consulting Engineer Service - Decided in favour of assessee. Issues:Service tax demand confirmation against the appellants for supervision charges collected during a specific period under Consulting Engineer Service category without payment.Analysis:The appellants contested the service tax demand, arguing that the charges were for executing works based on specifications provided by the client and not within the scope of Consulting Engineer Service. They highlighted that no wilful misstatement or suppression of facts occurred on their part.The Appellate Tribunal analyzed the agreement between the parties and found that the appellants were engaged to execute works based on designs provided by the client, not to provide advice or consultancy as required under Consulting Engineer Service definition. The service rendered did not fall within the scope of Consulting Engineer Service.Regarding the invocation of the extended period, the Tribunal noted that mere non-registration, non-filing of returns, or non-payment of tax are insufficient to prove suppression of facts. There must be evidence of intent to evade tax, which was not established in this case. The allegation of suppression of facts was deemed unsubstantiated.The appellants also argued that during the relevant period, companies were not covered under the Consulting Engineer category, citing various judgments supporting this claim. The Tribunal agreed that before the relevant amendment, companies were not included in the definition of Consulting Engineer. As the demand period predated the amendment, the appellants, being a company, were outside the scope of Consulting Engineer Service.In conclusion, the Tribunal found the impugned order unsustainable and allowed the appellant's appeal, setting aside the service tax demand.