1. By this appeal the Revenue challenges the Order-in-Appeal No.107/CE/GHY/2002, dated 11-6-2002 passed by the Commissioner of Central Excise & Customs, Guwahati, by which the Commissioner (Appeals) has allowed the appeal of the party with consequential relief.
2. Brief facts of the case are that proceedings were initiated by issue of show cause notice Vide C. No. V (30)2/SCN/ST/CEX/TSK/98/482, dated 7-1-99 against Shri Rabindra Das, BE (Civil Engineering, AMIE (India) on an allegation that he is a Consulting Engineer by profession required to collect Service Tax @ 5% on the gross amount charged by him and deposit the same to the credit of the Central Govt. in the prescribed TR-6 Challan, but had failed to deposit the Service tax, also failed to submit quarterly statement and also had not obtained registration under Service Tax and the proceedings culminated in the Order-in-Original No. DLV/TSK/CE/ADJ/OFF/4/2001, dated 4-6-2001 whereby the original authority has imposed penalty of Rs. 100/- per week for 59 weeks from 15-10-97 to 7-1-99 under the provisions of Section 77 of the Service Tax Act, 1994 besides directing the appellant to obtain Central Excise Registration under the said Act and to submit ST-3 returns for the relevant period i.e. 15-10-99 to 1-1-99 (sic) and also for the subsequent period as provided under Section 70 of the STA 1944.
Aggrieved by the said order the appellant moved the Commissioner (Appeals) who by the impugned order after considering the submissions made by the appellant has allowed the appeal of the appellant holding that definition of the Act is not specific and hence as per dictionary meaning the functions performed by the appellant is mainly that of valuer and of giving his opinion for purposes of loans, permission etc.
Aggrieved by the said order of the lower appellate authority the Revenue has come in appeal on the following grounds : (a) The respondent admitted to perform services like planning building, property valuation installed capacity assessment etc to the clients. These services are rendered by him in the capacity of a professional engineer and squarely falls under the provisions of the definition of Consulting Engineer.
(b) The functions performed by the respondent as admitted by him except that of property/LIC valuer are covered by the definition of Consulting Engineer and he is liable to pay Service Tax.
(c) The Commissioner (Appeals) has wrongly inferred that the Respondent is not covered by the definition of Consulting Engineer though she has accepted that the term "renders any advice or technical assistance" can be widely interpreted to cover various functions.
3. Shri JR Madhiam learned JDR appearing for the Revenue reiterated the above grounds and prayed for setting aside the impugned order and allowing the Revenue appeal.
4. Shri Rabindra Das, the Respondent in person appeared and submitted that functions such as planning of building, property valuation, installed capacity assessment, issue of Stability Certificate and preparation of Ground plan of factory which he is performing are neither structural engineering nor construction to management.
According to him consultant engineer is a special group of qualified engineer who directly or indirectly take part in the management of engineering works or structural engineering to provide advice/technical assistance for such management of engineering works/structural engineering works. The professional engineering as performed by him is not of consulting engineering and he prayed for rejection of the Revenue appeal. He has also relied upon an order passed by the Commissioner of Central Excise (Appeals), Bangalore dated 28-9-99 wherein the Commissioner (Appeals) has held that the task undertaken by a valuer is basically in the nature of expression of an opinion and does not involve any consultancy or technical assistance.
5. We have carefully considered the submissions made by both the sides and gone through the case records including the case law cited by the respondent. The issue involved in the instant case is whether any one or more of the following functions performed by the respondent herein falls within the ambit of the term "Consulting Engineer" : 6. Before we proceed to examine the question whether any one or more of the above functions performed by the Respondent come within the ambit of the relevant section, it is necessary to appreciate the provisions of the relevant Section of Act and the rules made thereunder.
"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 discipline of engineering.
Section 65(72)(g) defines taxable service in case of a Consulting Engineer as under: "Any service provided to a client by a Consulting Engineer in relation to advice consultancy or technical assistance in any manner in one or more disciplines of engineering" 7. We observe that the Commissioner (Appeals) in her order has made some observations as under before coming to a conclusion that the functions performed by the respondent herein is not covered by the definition of "Consulting Engineer" ; "It is well known that the country abounds in engineers who are without job. These Engineers would naturally look for jobs and would perform any function in any capacity awaiting a proper job.
Certainly all such Engineers cannot be expected to pay Service Tax and the term Consulting Engineer would have to be construed as those professionally qualified persons or firms who regularly advice or maintain works of public utility and work in any branch of engineering as qualified professional".
7.1 We are of the view that the above observation of the Commissioner (Appeals) is irrelevant to the issue at hand. She was expected to decide the issue in terms of the law. The law as it stands today require only those professionally qualified engineer or engineering firm who renders any service as noted above to pay the service tax and not the Engineers who are without a job. Further the Hon'ble High Court of Calcutta in the matter of M.N. Dastur & Company Ltd. v. UOI reported in 2002 (140) E.L.T. 341 (Cal.) relying on the judgment of "the Madras High Court (supra) has held that when an Engineer gives an advice or when engineer form an association or a firm or a company consisting of engineers rendering their service or service as a "Consulting Engineer" within the meaning of Section 65(72)(g) of the Finance Act cannot have any separate footing than that of the definition given in the Section.
Further the Hon'ble High Court of Karnataka in the case of Tata Consultancy Services v. UOl reported in 2001 (130) E.L.T. 726 (Kar.) has held that Section 65(13) of Finance Act, 1994 defined "Consulting Engineer" as 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 discipline.
8. Going by the definition of the term "Consulting Engineer" and "Valuers" and the clarification issued by the Department as noted above, we are of the considered opinion that all the six functions performed by the Respondent herein come within the ambit of the term "Consulting Engineer". Our view is fortified by the judgment of the Hon'ble High Court of Madras in the matter of Shanmugavel v. CCE.Chennai-II reported in 2001 (131) E.L.T. 14 (Mad.) wherein it was held that Valuers of Plant and Machinery being professionally qualified engineers, to be regarded as "Consulting Engineers" and services rendered by them are liable to service tax. It was also held therein that valuation of immovable property to be regarded as advice in the nature of engineering advice on the basis of knowledge of engineering and accordingly valuers rendering service as "Consulting Engineers" come within the meaning of Section 65(48)(5) of Finance Act, 1994 and service tax is leviable on services provided by such valuers. We therefore, hold that the order impugned is not legal and proper and we set aside the same.
9. We also observe that the original authority in the order portion has imposed a penalty of Rs 100/- per week for 59 weeks on the respondent from 15-10-97 to 7-1-99 in terms of Section 77 of the STA, 1994, besides directing the respondent to obtain Central Excise Registration under STA, 1994 and to submit ST-3 returns for the relevant period, whereas Section 77 deals with penalty for failure to furnish prescribed return for which the maximum penalty prescribed is 1,000/- (Rupees One thousand). Therefore, we reduce the penalty imposed under Section 77 from 100/- per week for 59 weeks to Rs. 1000/- (Rupees One thousand).
Penalty could have been imposed under Section 76 of the Act for failure to collect or pay service tax. The order of the original authority directing the respondent to obtain Central Excise Registration under Service Tax and to submit ST-3 return is upheld.10. In view of our above discussion and finding, the appeal of the Revenue is allowed to the extent as indicated above.