Show cause notice on design classification confirmed, appellant's appeal allowed

The appellant was issued a show cause notice regarding the classification of obtaining designs for a seamless pipe plant as Consulting Engineer services. Initially dropped, the demand was later confirmed. The appellant argued that obtaining designs did not constitute Consulting Engineer services. Regarding service tax liability, it was established that recipients in India were not liable for service tax on services received from abroad before 18.4.2006. As the supply of drawings occurred in January 2003, the judgment set aside the order, allowing the appeal and granting relief to the appellant.

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Issues:
1. Whether the activity of supply of drawing and designs for modernization and development of a seamless pipe plant falls under the category of Consulting Engineer.
2. Whether the appellant is required to pay Service Tax on the amount paid to a foreign-based service provider.

Analysis:
1. The case involved a show cause notice issued to the appellant regarding the classification of obtaining designs and drawings for modernizing a seamless pipe plant as Consulting Engineer services. Initially, the demand was dropped, but on revision, it was confirmed. The appellant contended that obtaining designs does not constitute Consulting Engineer services.

2. The appellant argued that prior to 18.4.2006, the recipient of services from a foreign supplier was not liable for service tax. They cited the Indian National Shipowners Association case upheld by the Supreme Court, which stated that service recipients in India were only liable for service tax from 18.4.2006 after the enactment of Section 66A of the Finance Act, 1994.

3. The Member (Judicial) considered the argument regarding service tax liability before 18.4.2006 as crucial. Referring to the Indian National Shipowners Association case, it was established that recipients in India were not liable for service tax on services received from abroad before 18.4.2006. The Departmental Representative also concurred with this view.

4. Consequently, the judgment set aside the impugned order since the supply of drawings and designs occurred in January 2003, well before 18.4.2006. The appeal was allowed based on this ground, with any consequential relief granted to the appellant. The decision was pronounced by Member (Judicial) Ashok Jindal.

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