TaxTMI 
TaxTMI 
2010 (7) TMI 176
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....eriod 2006-2007, in adjudication of another show-cause notice issued under Section 73(1) of the Act. In the revenue's appeal, which is directed against the same order of the Commissioner, the prayer is to enhance the penalty on the assessee under Section 76 of the Act. The assessee's Appeal No ST 432/2009 is against the order of the Commissioner demanding service tax of over Rs 1,00,00,000/- for the period 2007-2008 in adjudication of a show-cause notice dated 6.10.2008 and seeking to levy interest on tax and imposing penalty on the assessee. 2. The show-cause notices issued for recovery of service tax from the assessee for the period 2006-2007 and 2007-2008 are within the normal period whereas the show-cause notice dated 13.06.2006 which was issued for recovery of service tax for the period 2001-2002 to 2005-2006 invoked the extended period of limitation on the ground of suppression of facts. 3. The assessee, namely M/s APITCO Ltd., is an organization promoted jointly by several financial institutions including the Andhra Pradesh State Industrial Development Corporation and nationalized and other banks. The assessee registered themselves as 'consulting engineers'....
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....cal assistance, rendered in any manner either directly or indirectly by a scientist or technocrat or any science or technology institution or organization, to a client, in one or more disciplines of science or technology." The department took the view that, in the implementation of the governmental schemes, the assessee was rendering "scientific or technical consultancy" service to the governments concerned. It is this view which made its way into the show-cause notices and the subsequent proceedings which culminated in the Commissioner's orders. 4. Learned counsel for the assessee has submitted that, as an implementing agency for the governments concerned, they were just implementing welfare schemes by making use of the grants-in-aid given by the governments and therefore there was no service provider-client relationship between the assessee and the governments. He has also submitted that no advice or consultancy or assistance of scientific or technological character was given to the governments in the execution of the aforesaid schemes/projects and therefore there was no question of payment of service tax on the grants-in-aid given by the governments. In this connection, the....
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....l these facts in writing to the jurisdictional Assistant Commissioner. In that letter, the company categorically stated that they were not paying service tax on certain specified items of income for specified reasons. It is submitted that the factual position was reiterated in a letter dated 22.4.2006 addressed to the jurisdictional Superintendent of Service Tax. It is submitted that all the activities of the assessee, which have since been held to be exigible to service tax under Section 65(105) (za) of the Act, were clearly disclosed in the above letters to the department and, therefore, there can be no allegation of suppression against them. It is, therefore, argued that a major part of the demand of duty confirmed against the assessee in adjudication of the first show-cause-notice is time-barred as it is beyond the normal period of limitation. 5. Learned JCDR submits that the projects implemented by the assessee on behalf of the governments concerned were inextricably linked to science/technology in one way or the other. He submits that the company executed the projects through their engineers (technocrats). He submits that the so-called grants-in-aid were, indeed, the conside....
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....stion now is whether there was "service provider-client" relationship between the assessee and the governments. Here, again, the nature of the amounts paid by the governments to the assessee is decisive. A client must not only pay the expenses of the service but also the consideration or reward for the service to the service provider. Admittedly, in the present case, there was no payment, by any government to the assessee, of any amount in excess of what is called "grant-in-aid". Thus any service provider-client relationship between the assessee and the governments is ruled out. It is true that the assessee had executed the governmental schemes mainly through their engineers (technocrats) but this was not enough for the revenue to bring the assessee within the ambit of "scientific or technical consultancy" as clearly held by this Bench in the case of Administrative Staff college of India (supra). [An organization rendering "scientific or technical consultancy" service under Section 65(105)(za) of the Finance Act 1994 must be a science or technology institution. The assessee-company has not been shown to be such an institu....