TaxTMI 
TaxTMI 
2007 (6) TMI 1
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....ty, with potential expansion to 10 MMTPA capacity at the specified temperatures. The EPC contract also envisaged providing marine facility (jetty and island brake water) for transmission and supply of LNG to purchasers. The project involved, inter alia, offshore supply, offshore services, onshore supply, onshore services and construction & erection. c. PLL entered into an agreement dated 15-1-2001 with the appellant for project management consultancy in relation to setting up and operating the above said LNG terminal. (This agreement is directly relevant for the present proceedings.) d. The agreement detailed the various areas in which the appellant was required to advise, assist in relation to the execution of the project. e. The agreement contemplated the provisions of both offshore services and onshore services. For the said purpose, the agreement also defined the terms like onshore services and offshore services. The rates specified are different for offshore services and onshore services. f. PLL settled the amounts as per the invoices issued by the appellants after making a verification of the particulars. g. The original authority held that the services rendered by the a....
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....in the nature of advice, consultancy or technical assistance and the same should be in the discipline of engineering. However, in the present case, the Appellants provided the services which was the combination of engineering, administration and financial services. As per clause 2.2 of the agreement, the Appellants were to provide the all services as specified in the agreement and the Appellants were paid the single consideration for providing the all services in agreement. 4.4 He submits that the entire transaction has to be seen as a whole and one part of the transaction cannot be seen in isolation for purpose of taxation. By treating the agreement as a single contract, it is clear that the Appellants provided the services which are the combination of engineering, administration and financial services for a single consideration. The services provided under the agreement are not solely in the discipline of engineering. Further, the services are not purely in cerebral nature. Hence the appellants are not liable to pay service tax on the consideration received under the agreement. In this regard, the appellants place reliance on the case of Daelim Industrial Co. Ltd. v. CCE2003 (15....
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....ting engineer'. Further the appellants are non-resident and do not have any registered office in India, hence the appellants cannot be made liable to pay service tax. In any case, the services provided outside India are outside the coverage of service tax authorities. The appellants therefore submit that they were and still are of the bona fide view that they are no liable to pay service tax. The appellants did not have any intention to evade the payment of service tax. In fact, the appellants have deposited the service tax along with interest prior to issue of the SCN in respect of onshore services. Hence, no penalty can be imposed on the appellants. 5. The ld. DR also took us through various provisions of the agreement and submitted that they are rendering services because of extensive experience in the field of engineering. Their role is that of consultancy advisory management services. The agreement specifies the qualification of personnel to be employed by the appellant for the purpose of rendering such consultancy, advise of PLL. The minimum qualification prescribed is a degree in engineering and in many cases, experience in specialized fields of engineering is a must. T....
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....'s degree in engineering. It also envisages in many cases long years of experience in major engineering projects. In some cases also envisages qualification in business administration. In whatever field, when the people rise high in the organization, manage- merit expertise becomes a necessity. Whether they can be treated as engineers E with management expertise or managers with engineering expertise? 6.5 Rendering advice on choice of materials looks as if it is mainly on a commercial aspect. Considering the sophisticated nature of the engineering project, the expertise required is more about the technical specifications and requirements of the materials and the commercial aspect appears to be not the main issue but a secondary issue. Similarly rendering advice in selection of personnel looks to be an exercise of HR Department. The choice of personnel for the sophisticated project of this nature depends more on the assessment of the technical skill of the personnel chosen and the other skills required appear to be of secondary importance. In assessing the quality of work executed by the specialized engineers of the EPC contractors also, the emphasis is on the technical knowled....
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....able. 7. The appellant have made a submission that the quantum of service tax on the on-shore services should be restricted to Rs. 88,18,761 instead of Rs. 1,03,73,013 as the Commissioner (Appeals) has taken the entire amount realized as taxable value instead of treating them as cum-duty value; the service charges have been calculated as having been realized at an average exchange rate of Rs. 48.50 per US$ even though in several cases they have received at conversion rates which are lower than Rs. 48.50 per US$ certain amounts billed but not received has already been taken into account for calculating the service charges. Their submissions have not been contested by the Ld. DR. These submissions are therefore relevant and acceptable. There fore, the actual duty liability is restricted to Rs. 88,18,761 as claimed by the appellant. 8. Regarding imposition of penalty, it is noticed that the appellant not only shown the service tax separately on the invoices but also recovered the amount from PLL. There was no justification on the part of the appellant to collect the service tax from PLL through the invoices and not to pay the service tax. Under these circumstances, the claim that th....