2014 (12) TMI 500 - AT - Service Tax

Tribunal rules in favor of appellants, setting aside service tax demand on consulting engineer services.

CROMPTON GREAVES LTD. Versus COMMISSIONER OF C. EX., MUMBAI-III

The Tribunal ruled in favor of the appellants, setting aside the demand for service tax on consulting engineer services provided during the disputed ... Consulting Engineer service - Whether the companies, i.e. body corporate, are covered under the definition of ‘consulting engineer’ prior to 1-5-2006 - Held that:- Trade Notice No. 53-C.E. Service Tax/97, dated 4-7-1997 clarified that in respect of consulting engineer service where the services are rendered to the prime consultant by the sub-consultant, the sub-consultant is not liable to pay service tax. In the present case, the Revenue is not disputing that the appellant provided services to M/s. NEC Engineers Pvt. Ltd. as a sub-contractor. Following decision of Turbotech Precision Engineering Pvt. Ltd. [2010 (4) TMI 344 - KARNATAKA HIGH COURT] - Decided in favour of assessee. Issues:1. Whether the demand for service tax on consulting engineer services provided by the appellants is sustainable for the period November 1998 to March 2003.2. Whether the definition of 'consulting engineer' prior to 1-5-2006 includes companies or body corporates.3. Whether the services provided by the appellant as a sub-contractor to M/s. NEC Engineers Pvt. Ltd. are liable for service tax.Analysis:1. The appellants contested the demand for service tax on the consulting engineer services provided by them during the period in dispute. The Revenue issued a show cause notice, and the demand was confirmed by the adjudicating authority, with penalties imposed. The appeal filed by the appellant was dismissed by the Commissioner (Appeals).2. The contention of the appellants revolved around the definition of 'consulting engineer' prior to 1-5-2006. They argued that as a body corporate, their services were not covered under the definition before the amendment. They cited a decision of the Hon'ble Karnataka High Court to support their claim, which held that services rendered by a company were not covered under the definition of 'consulting engineer service' before the said amendment.3. The Revenue, on the other hand, relied on the agreement between the appellant and M/s. NEC Engineers Pvt. Ltd., asserting that the appellant provided consulting engineer services and, therefore, was liable to pay service tax. However, the Tribunal referred to the decision of the Hon'ble Karnataka High Court, which clarified that companies were not included under the definition of 'consulting engineer' before the 2006 amendment. The Tribunal also highlighted a trade notice stating that when services are rendered to the prime consultant by a sub-consultant, the sub-consultant is not liable to pay service tax.4. Considering the above arguments and legal precedents, the Tribunal found merit in the appellant's contention. The Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant. The Tribunal's decision was based on the interpretation of the definition of 'consulting engineer' before the 2006 amendment and the specific circumstances of the case where the appellant provided services as a sub-contractor.By analyzing the issues raised, the Tribunal's decision, and the legal interpretations provided, it is evident that the demand for service tax on the consulting engineer services provided by the appellants during the specified period was not sustainable due to the specific legal definitions and precedents cited in the case.