| SooperKanoon Citation | sooperkanoon.com/41579 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu |
| Decided On | Jan-20-2006 |
| Judge | S T T.V. |
| Reported in | (2006)(107)ECC297 |
| Appellant | Commissioner of Central Excise |
| Respondent | Agnice Fire Protection |
2. The respondent, Agnice Fire Protection Ltd., were found rendering services as "Consultant Engineering" during the period July, '97 to June 2000. The show-cause notice issued to them on 18.10.2001 refers to the following activities as admitted by the appellants for categorizing them as "consulting engineer" : (a) Receiving enquiries from clients for design engineering supply of equipments, erection and commissioning of fire-fighting system based on which offers are supplied.
(b) Receiving work orders for fire fighting system in 2 parts (a) for design engineering and supply of equipment and (b) for erection and commissioning of the same.
(c) Preparation of a detailed engineering drawing for fire fighting system.
(d) Procurement of equipments as mentioned in the work order and their delivery to the site (e) Erection of the system at the client's site for which mobilisation of manpower by appointing sub-contractors (f) Test/commissioning/training the client's personnel on handling the system (g) Submitting the erected drawings, operating system manual and handing over the system to the clients. The SCN also envisaged that supply of materials/equipments does not come under the scope of taxable service and hence it does not form part of computation of consultancy charges and hence the value was not included.
3. In his Order-in-Original, the ACCE confirmed the demand of Rs.25,756/- limited to services rendered as engineering consultant, imposed penalty and charged interest.
4. Commissioner (Appeals) however set aside the O-in-O, on the ground that only after Finance Bill 2003, erection and commissioning charges becomes liable to service tax. He observed as under: The appellants supply fire-fighting equipment to their clients and undertake erection and the commissioning of the same. Certain of the clients have consultants in the respective fields of specialization who insist upon the appellants giving the design specifications of the manner in which the equipment would be erected. The consultant sometime make certain changes and accordingly the erection of the equipments are done. The appellants comply with the directions of the various consultants and ensure proper functioning of the same.
Because, these are fire-fighting equipments, the Tariff Advisory Committee of the insurance companies are also involved in giving design specifications. It is the contention of the b2 appellant that they are by no standards a "consulting engineer" in terms of the definition under Clause 13 of Section 65. Even with reference to the CBEC Circular F.No. B/43/5/97-TRU dated 2.7.97, they cannot be termed as an engineering consultant.
5. Being aggrieved with the Order-in-Appeal, the Revenue has filed the present appeal. The ld. SDR elaborates on the definition of the "Consulting Engineer's Service", which reads as follows: consulting engineer" means any professionally qualified engineer or an engineering firm who, either directly or indirectly, render any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering" From the above definition, it is clear that any of the three activities, namely, 'advice', 'consultancy' or 'technical assistance', has to be identified in the type of services rendered by the 'engineer' or by an 'engineering firm'. The ld. SDR also relies upon the following decisions/judgment: The question is to see the rendering of the service in what capacity - if it is consulting engineer certainly they will attract the knowledge of such service based upon knowledge in engineering then automatically they must come within the purview of the section ....
Turnkey basis contract vis-a-vis consultancy contract - contract for construction, erection and installation of desulphurisation plant on payment of lump sum price - Drawings / documents submitted by the appellant/contractor to be reviewed by Engineers India Ltd./owner - Contract was on turnkey basis and not a consultancy contract - Work contract cannot be vivisected and part of it subjected to service tax.
Liability - 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 disciplines of engineering" - Petitioner's contention that this confines the levy only to individuals and partnership firms and that incorporated companies are excluded, not acceptable - As per Section 68(1), which related to collection and recovery of service tax, the levy falls on 'every person' providing the service which expression includes natural persons as well as juristic persons - Tax being on the service provided, the Act made no distinction between different categories of service providers, be they individuals, partnership concerns or incorporated companies - Making any such classification would create and perpetuate anomalies -Petition fails.
whether erection & commissioning charges" are liable to service tax, or not. This matter has also been examined in the Board. The work of erection and commissioning of machineries and plants, is definitely one of providing "technical assistance" to buyer of plant/machinery and is, therefore, in the nature of services provided by a "Consulting Engineer" and hence taxable.
4. Nobody represented the respondent despite notice. Nor was there any request for adjournment. Incidentally, it is also noticed that in the past several adjournments were sought and the hearings got adjourned.
Even during the last hearing date (fixed for 21.11.05), none represented the respondents despite notice. At that time, a last chance was given. As no communication has been received from the respondent and as no representation has been made for further adjournment, the matter is now taken up for final hearing. Having gone through the case records and also after hearing the ld. SDR, it appears clear that the nature of services rendered by the respondents during the material time can be brought within the frame work of a "consulting engineer's services" as defined in Clause (13) of Section 65 of the Finance Act, 1994 as the service rendered clearly indicates certain basic engineering involving designing, erection, commissioning, training etc - a wide spectrum of tasks demanding certain professional engineering skills, which can be brought within the ambit of the term 'technical assistance'. In the result, I set aside the order of the Commissioner (Appeals) and restore the Order-in-Original passed by the authority below. However, taking into consideration the facts and circumstances of the case and acknowledging the fact that service tax was a nascent levy at the material time which posed several teething problems both for the assessees and also for the Dept., I hereby reduce the penalty imposed on the respondent under Section 76 to Rs. 5000/- (Rupees Five thousand only). The Order-in-Original will stand modified to this extent. The appeal is disposed of in the above terms.