Computer software training cannot be taxed as consulting engineer service before the training service levy took effect.

Computer software training in UNIX, LINUX, AIX and networking was treated as training or coaching rather than Consulting Engineer Service for the period before 1-7-2003. The analysis notes that the factual record showed computer training activity, while the tax authorities relied mainly on a circular without testing the activity against the statutory definition. Because such training was brought into the tax net separately only from 1-7-2003 as Commercial Training or Coaching Service, it could not be retrospectively classified as engineering consultancy. The demand for service tax, interest and penalty was therefore set aside.

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Issues: Whether computer software and computer training imparted by the assessee was classifiable as Consulting Engineer Service and taxable for the period prior to 1-7-2003, or whether the demand was unsustainable as the activity fell within training or coaching.

Analysis: The invoices showed training in computer software, including UNIX, LINUX, AIX and networking. The impugned order failed to examine the actual nature of the activity against the statutory definition of Consulting Engineer Service and instead relied only on a circular referring to manpower planning and training. The relevant training activity was separately brought into the tax net only from 1-7-2003 as Commercial Training or Coaching Service. For the earlier period, the same activity could not be artificially brought under Consulting Engineer Service merely by reference to the circular, particularly when the factual record indicated computer training and not engineering consultancy.

Conclusion: The demand of service tax, interest and penalty could not be sustained and was set aside in favour of the assessee.

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