2005 (10) TMI 5 - AT - Service Tax

Tribunal rules civil contractor not liable for service tax as consulting engineer

The Tribunal overturned the service tax liability imposed on the appellants, a civil contractor engaged in construction activities, who were classified as ... Composite Contract - Not subject to service tax Issues: Determination of service tax liability based on classification as consulting engineers under Clause 13 of Section 65 of the Finance Act, 1994.Analysis:The appeal was filed against the Order-in-Appeal confirming the service tax demands on the appellants categorized as consulting engineers. The appellant, a civil contractor engaged in construction activities, argued they were not qualified engineers but contractors working on a project basis. They contended that their work was supervised by professionally qualified engineers, and they merely followed technical advice provided. The authorities disagreed with the appellant's classification.In a similar case, Daelim Industrial Co. Ltd v. CCE, Vadodara, the Tribunal held that a contractor involved in construction activities could not be considered as consulting engineers. The appellant's counsel cited this precedent to support their argument.Upon careful consideration, the Tribunal noted the inconsistency in previous orders and analyzed the nature of the contract work. It was established that a contractor receiving lumpsum payment for executing work based on plans and technical advice from consulting engineers does not fall under the definition of 'consulting engineers' as per the service tax law, which specifically refers to professionally qualified engineers or engineering firms. Therefore, the Tribunal concluded that the appellant's classification as consulting engineers was incorrect. Citing the precedent case, the Tribunal set aside the impugned order and allowed the appeal.The decision was pronounced in open court following the hearing, overturning the service tax liability imposed on the appellants based on their misclassification as consulting engineers under Clause 13 of Section 65 of the Finance Act, 1994.