Government Undertaking Liable for Service Tax as Consulting Engineer, Penalties Set Aside

The Tribunal held that the appellant, a Government of India Undertaking, was liable to pay service tax under the category of "Consulting Engineer" for the disputed period before the amendment. However, the penalties imposed on the appellant under the Finance Act, 1994 were set aside due to the absence of willful misstatement or suppression. The appeal was partly allowed, with the decision announced on 4.5.2018.

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Issues:
- Whether service tax liability under the category of "Consulting Engineer" is applicable to the appellant for the period prior to the amendment in the definition.
- Whether penalties imposed on the appellant under the Finance Act, 1994 should be upheld.

Analysis:
1. The appellant, a company engaged in inter-state transmission of electricity and a Government of India Undertaking, entered into agreements with the Bihar State Electricity Board for consultancy services. The department demanded service tax of Rs. 1,26,47,105 for the period from 15.12.2003 to 02.09.2004, which the appellant challenged in the appeal.

2. The appellant argued that prior to the amendment in the definition of "Consulting Engineer" w.e.f. 01.05.2006, no service tax was leviable. They relied on precedents like Commr. Of Central Excise & Service Tax vs. Simplex Infrastructure & Foundry Works to support their claim.

3. The department defended the impugned order, citing decisions like Tata Consultancy Services vs. Union of India, stating that the service tax levy under "Consulting Engineer" is applicable without distinction between "Firm" and "Company".

4. The Tribunal considered the definition of "Consulting Engineer" before the amendment, which included "professionally qualified engineer or an engineering firm". Precedents like Simplex Infrastructures Ltd. favored the appellant's stance, indicating that a company could be included under the definition.

5. Referring to the judgments in Tata Consultancy Services and M.N.Dastur and Co. Ltd., the Tribunal concluded that the definition of "Consulting Engineer" encompassed companies as well as individuals before the amendment. The intent of the legislature was to charge service tax on consulting engineers, regardless of their form.

6. Consequently, the Tribunal held that the appellant, being a Government of India Undertaking, was liable to pay service tax for the disputed period. However, the penalties imposed on the appellant were set aside under Section 80 of the Finance Act, 1994, as there was no willful misstatement or suppression on their part.

7. The impugned order was modified, and the appeal was partly allowed, with the decision pronounced in the Open Court on 4.5.2018.

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