2019 (6) TMI 127 - AT - Service Tax

Engineering College Exempted from Service Tax as Consulting Engineer: Case Overview

M/s Malviya National Institute of Technology Versus Commissioner, Service Tax, Jaipur

The appellant, an engineering college, was found not liable to pay service tax under the category of 'Consulting Engineer' (CE) for the period before 16 ... Classification of services - Consulting Engineer or not - period prior to 16 July 2001, namely, from 1 April 2000 to 15 July, 2001 - HELD THAT:- The definition of ‘CE’ services as it stood prior to 16 July, 2001 was not amended when a new service namely, ‘STC’ was inserted on 16 July, 2001. It cannot, therefore, be alleged that ‘STC’ service had been carved out from ‘CE’ Services. In fact, the definition of ‘CE’ services continued to remain the same, till it was amended in 2006. Thus, the Show Cause Notice proceeded on an incorrect premise that even prior to 16 July, 2001, the nature of service provided in ‘STC’ services was the same as ‘CE’ Service. The definition of ‘CE’ as it stood at the relevant time means any professionally qualified engineer or an engineering firm who either directly or indirectly renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. The Appellant is neither “professionally qualified engineer” or an “engineering firm”. It cannot, therefore, be said that the Appellant had been providing ‘CE’ services. In fact, the nature of service provided by the Appellant would clearly fall under the category of ‘STC’ services and the Appellant had paid service tax when this service was introduced on 16 July 2001. Appeal allowed - decided in favor of appellant. Issues:1. Whether the appellant was liable to pay service tax under the category of 'Consulting Engineer' (CE) for the period prior to 16 July 2001Rs.2. Whether the definition of 'CE' as it stood at the relevant time includes the services provided by the appellantRs.3. Whether the Commissioner (Appeals) erred in referring to the definition of 'CE' as amended in 2006Rs.4. Whether the services provided by the appellant fall under the category of 'Scientific and Technical Consultancy' (STC) instead of 'CE'Rs.Analysis:1. The appellant, an engineering college, was alleged to have provided services falling under 'CE' category and was issued a Show Cause Notice for non-payment of service tax for the period before 16 July 2001. The dispute arose due to the similarity between 'CE' and 'STC' services. However, the Tribunal found that the Show Cause Notice proceeded on an incorrect premise as the definition of 'CE' remained unchanged before 16 July 2001. The appellant had paid service tax under 'STC' services after its introduction on 16 July 2001.2. The Commissioner (Appeals) upheld the order based on the amended definition of 'CE' in 2006, which included any professionally qualified engineer, body corporate, or firm. However, the Tribunal noted that the original definition of 'CE' did not include these entities at the relevant time. As the appellant was an engineering institute and did not fall under the amended definition, the services provided were correctly categorized under 'STC' services, for which service tax was paid.3. The Commissioner (Appeals) erred in referring to the amended definition of 'CE' while deciding the case. The Tribunal highlighted that the definition in force at the relevant time did not encompass the appellant's services. Therefore, the decision based on the amended definition was incorrect, leading to the dismissal of the appeal.4. The Tribunal concluded that the appellant's services aligned more with 'STC' services rather than 'CE' services. The nature of services provided by the appellant, being an engineering college, fell under 'STC' services as per the original definition. The appellant had correctly paid service tax under 'STC' services post its introduction. Consequently, the impugned order was set aside, and the appeal was allowed based on the correct categorization of services provided by the appellant.