Service Tax: Consulting Engineer Service: Activity of engineering design services and chip designing for customers located outside India: Exporting taxable services and in terms of Rule 5 of CENVAT Credit Rules 2004 read with Notification No. 5/2006 CE (NT) dated 14.03.2006 appellant is eligible for the refund of unutilized accumulated CENVAT credit: Scope: In view of the inclusive definition of 'input service', they are eligible for the credit of tax paid on disputed services also. In the case of Deloitte Tax Services India Pvt. Ltd. STO 2008 CESTAT 624 it was held that a service provider is eligible for Commercial Training or Coaching Service, Manpower Recruitment Service, Transport Service, Professional Consultation Service. Further in the case of Kirloskar Oil Engines Ltd. CEO 2008 CESTAT 360 and in the case of M/s. Victor Gaskets India Ltd. STO 2008 CESTAT 233, it was held that the definition should be construed in a wide manner. The different services and how they were used was explained in detail. The appellant is eligible for the benefit of credit. The decisions cited are M/s. Cable Corporation of India Ltd. CEO 2008 CESTAT 59, M/s. Finolex Cables Ltd. STO 2008 CESTAT 642 (Para 1).

Appeal allowed.

Service Tax: Export of Consulting engineering service: Rebate claim on input services availed during the period September 2004 to August 2005, but prior to registration with Service Tax department : Scope and admissibility: As the appellant has filed all the necessary details of input service even after export, are to be treated as in compliance of Notification 12/05. The decision of Wipro Ltd. STO 2013 Del 1629 is supportive. Accordingly, on this ground they are entitled to refund claim. Further, rebate claim was denied on the ground that they have not taken the registration. The issue came up before this Tribunal in Textech International P. Ltd. STO 2010 CESTAT 626 wherein this Tribunal held that as per Section 69 of the Finance Act, 1994 a person who is liable for paying service tax is required to apply for registration. Admittedly, the appellant is although providing taxable service but the same is exempted therefore, they are not required to pay service tax, registration is not required. As the appellant is not required to pay service tax, therefore, they are not required to file service tax returns.(Para 8).

Appeals allowed.

Consulting Engineering Service: Demand: Valuation: Where merely reimbursement of expenses incurred by a service provider is involved and no consideration is received in excess of the reimbursements, there would be no liability to tax.

Consulting Engineer Service: Petitioner rendered taxable service as 'consulting engineer' but failed either to obtain registration, file returns or remit its tax liability. In the circumstances, invocation of the extended period of limitation and the order of assessment as confirmed in appeal confirming demand of service tax, interest and penalty are impeccable.

Consulting Engineering Service: Intellectual Property Right Service: Appellant only a matriculate and not engineer, hence, does not qualify as a "Consulting Engineer": Appellant was a patentee and transferred the right use the patent to his client for consideration of royalty payment: Service merits classification under "Intellectual Property Service" which came into tax net with effect from 10/09/2004: Period in dispute is much prior to that, there is no service tax taxability.

Consulting Engineering Service: Demand for period prior to 18.4.2006 not sustainable as per Bombay High Court judgment in the case of Indian National Ship Owners’ Association: For subsequent period supply of technical know-how does not come within the purview of "Consulting Engineer's Service": Demands not sustainable.

Consulting Engineer's Service: Transfer of technical know-how: technical know-how supplied by the appellant consisted of the patents, secret information, licence fee for use of trade mark and so, on. These fall under the category of Intellectual property Rights which came under the tax net only in 2004.

Consulting Engineering Service: Whether effective only from 23.8.2007 when Board issued clarifications: Clarification on the consulting engineering service is of clarificatory nature whereas the levy of service tax is governed by the definition of the Consulting Engineering Service and taxable service.

Consulting Engineering Service: Intellectual Property Right: From the terms and condition of the agreement, it is clear that the foreign service provider did not render any advice in manufacturing of the shock absorbers and struts for automobile, so as to come within the category of Consulting Engineers Service. What has been provided is technical know-how in relation to various automobile products. Such technical know-how would come under the category of Intellectual Property Right.

Consulting Engineer Service: Service received from abroad: In view of the legal position that service tax can be demanded from the recipient of the service provided by foreign entities only w.e.f. 18.04.2006, when Section 66A came into force and since in the present case, the service received is much prior to the said date, the demands are not sustainable in law.

Consulting Engineering Service: Appellant performed is operation and maintenance of wind mills and not rendering any advice, consultancy or technical assistance in any field of engineering, which is the criterion for classifying the service under the category of 'Consulting Engineer's Service'. Such executory services does not come under the purview of 'Consulting Engineer's Service'.

Erection, Commissioning & Installation Service: Notfn.No. 45/2010- S.T : any activity or service like erection, commissioning and installation of transmission towers and meters as also technical testing and analysis would constitute the activity of transmission and distribution by the service provider to the service receiver; and such service would be squarely covered under exemption provided under this notification. 

Consulting Engineering Service: Demand: Stay: Supervising the construction is not a taxable service under the category of 'Consulting Engineers Services'. The scope of the 'Consulting Engineers Services' is related to advice, consultancy or technical assistance in any manner. Hence, the appellants are not liable to discharge Service Tax on this activity.

Consulting Engineer Service: Whether the companies, i.e. body corporate, are covered under the definition of 'consulting engineer' prior to 1.5.2006: After amendment of definition from 1.5.2006 only the companies covered: Demand dropped relating to period prior to 1.5.2006 for company having provided consulting engineering service.

Consulting Engineering Service: Transfer of technical know how not covered: Departmental appeal dismissed.

Consulting Engineering Service: Supply of technical know how does not fall under the category of 'Consulting Engineer's Service'

Consulting Engineering Service: Service received from abroad prior to 18.04.2006: technical know-how for manufacture of goods and royalty has been paid for the services so received: Such service is not classifiable under the category of Consulting Engineer's service.

Consulting Engineer’s service: Royalty received for technical know-how: Service received by the appellant does not come within the category of 'Consulting Engineer's Service' as payment of royalty for supply of technical know-how is not covered in the scope of this service.

Goods Transport Agency: Consulting Engineering Service: Reverse charge mechanism : It is relevant that as successor-in-interest of the business of Wind Energy Division of NEPC, they were the beneficiaries of the services and it cannot be said that the services were not received by them: Directions issued for partial pre deposit.

Consulting Engineering Service: Demand: Transaction involved herein is a technical collaboration and licence agreement as per which the respondent has supplied the technical know-how to manufacture and market automotive and nonautomotive filters to M/s. Kirloskar Mahle Filter Systems Pvt. Ltd. and the supply relates to technical information such as documents, drawing, design, definition, testing of products etc. to manufacture in India and also to market the product in India. For the said services, the respondent paid royalty/ license fees: Not taxable under CES. 

Consulting Engineering Service: transfer of technical know how not covered: Departmental appeal dismissed.

Consulting Engineering Service: Installation and erection of boilers at buyers’ site: services of erection, installation and commissioning are not covered under the category of "Consulting Engineer Services".

Consulting Engineering Services: Demand: Stay: Supply of technical know-how does not come under the category of Consulting Engineer Service. Even if it is assumed that the said service comes under the "Consulting Engineer Service", prior to 2006 only service rendered by a Consulting Engineer or a Consulting Engineering firm was liable to pay service tax: Unconditional stay granted.

Consulting Engineer Service: Whether the payment of royalty towards the technical know-how is to be liable to tax under the category of "Consulting Engineer's Services": Not taxable: Appeal dismissed.

Consulting Engineer’s service: Services received from abroad: the period involved is 01/04/1999 to 31/04/2003, there is no liability on the respondent to discharge service tax liability on reverse charge 'basis.

Consulting Engineer’s Service: Payment of royalty for supply of technical know-how is not covered within the scope.

Consulting Engineering Service: Rule 5 of Valuation Rules: Validity challenged: By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld.

Consulting Engineering Service: Huge amounts received by the appellants : Meager amount of service tax shown in ST-3 return and paid not justified: Taking financial difficulty in consideration, directions issued for partial pre deposit.

Consulting Engineering Service v/s Intellectual Property Right: Appellants by mistake shown in ST-3 the taxable service as Consulting Engineering Service: Fact that they also paid R&D Cess shows that they had provided IPR service: Matter remanded back to go through the contract, nature of service, etc and decide classification.

Consulting Engineering Service: Service received from abroad: Service receiver undertakes to pay service tax: Taxable only from 18.4.2006: Demand set aside.

Consulting Engineering Service: Applicants being a unit of SAIL, training personnel of same unit is a self service, hence, not taxable: Stay granted.

Consulting Engineering Service: Service provided to self is not liable to service tax.

Consulting Engineering Service: Appellants registered with the department for providing various taxable services: Service tax demand raised on the basis of figures shown in the balance sheet without showing the services for which these amounts were received: Appellants also did not file detailed reply to show that this amount was received for other services by producing documentary evidences: Matter remanded.

Consulting Engineering Service: Reimbursible expenses other than lodging, boarding and traveling of engineers: Stay: Due to Circular issued by the Board the appellants had bonafide belief that these expenses were not includible: Stay granted.

Consulting Engineer Service: Transfer of technical kno-whow how has been held to be as not falling under the category of consulting engineering service.

Taxablity: Services provided prior to 1.7.2003 when the disputed services were brought within service tax net: Prima facie case made out for waiver.

Service Tax: Consulting Engineer as defined in Section 65 (31): Demand: It is established that to render advice means to give opinion or to make a recommendation regarding decision or course of conduct. Consulting means seek information or advice from a person or to take counsel. Person consulted is a consultant and hence consultancy means rending professional advice or service Similarly, ‘technical assistance’ means providing assistance on the basis of special skill and knowledge. Where a person himself undertakes a job on contract basis for installation, erection and commissioning of machine, service are in the nature of execution of jobs and not in the nature of advice, consultancy or technical assistance. As observed by the original adjudicating authority, the word ‘technical assistance’ is preceded by the words ‘advice’ and ‘consultancy(Para 9). Therefore, deputation of manpower to HPL by the appellant cannot qualify as the service provided by ‘Consulting Engineer’. Similarly, the activities undertaken by the appellants as per the agreement dt. 28.10.98, cannot be considered as advice,’ ‘consultancy’ and ‘technical assistance’ in nature.(Para 11).

Limitation of period: Something positive other than mere inaction or failure on the part of the manufacture or producer or conscious or deliberate withholding of information when the manufacture knew otherwise is required before it is saddle with any liability before the period of six months.(Para 13). These ingredients postulate a positive act. Failure to pay duty or take out a licence is not necessarily due to fraud or collusion or willful mis-statement or suppress of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision(Para 14 ). Therefore, the extended period cannot be invoked in this case. In view of the foregoing, the impugned order is set aside and allow the appeal with consequential relief, if any, to the appellant.(Para 15,16).

Intellectual Property Service: Consulting Engineering Service prior to introduction of Intellectual Property Service; Prima facie service not covered under Consulting Engineering Service: Waiver from pre deposit granted.

Service Tax: Consulting Engineers Service: Demand: Suppression of information: Penalty under Section 78: It is not disputed that technical advice, consultancy and technical assistance was provided. It is claimed that these services were provided as part of indivisible Lump-sum Turnkey Contracts whose objective was supply of installed and functioning control system/equipment. The adjudicating authority and first appellate authority have found that the services rendered as "consulting engineer" are clearly distinguishable as the clauses of the contracts show the intention to provide these services and to charge separately for the same. None of the contracts, in question, is an indivisible work contract for erection, installation and commissioning of machinery/equipment. Since these are not indivisible work contracts, the question of their divisibility is irrelevant.(Para 2.2.1). Appellant while providing consulting Engineer's service in form of preparing basic engineering drawing as well as detailed engineering drawings of the Instrumentation and control system to be installed and training of the clients personnel in operation and maintenance of the system, they neither informed the Department about this activity for seeking clarification as to whether this activity will attract service tax nor applied for service tax registration nor paid the same. They took service tax registration for "consulting Engineer's Service" alongwith "erection, installation and commissioning service" on 20/1/04. There is no explanation for non-payment of service tax and not obtaining service tax registration in respect of 'consulting engineer' service during July 1997 to mid January 2004 period. Therefore, Appellant are guilty of suppressing the relevant information from the Department and, therefore, longer limitation period of five years for recovery of non-paid service tax has been rightly invoked by the Department.(Para 6.2). Since during the period for July 1997 to January 2004 neither service tax registration for consulting engineer's service was obtained, nor ST-3 returns were filed, penalty under Section 77 has been rightly imposed Since for the period for July 1997 to April 2004, no service tax was paid by the Appellant on the amount received for consulting engineer's service provided by them, and no explanation has been given for this failure to pay the service tax every month by the due date during this period, penalty under Section 76 of the Finance Act, 1994 has been rightly imposed on the Appellant.(Para 7.1). As regards the penalty under Section 78, the same is attracted when any service tax has not been levied or paid or has been short levied or short paid or has been erroneously refunded. The Appellant's conduct during the period of dispute amounts to suppression of facts, as while they were providing the consulting Engineering service, taxable since 7/7/97, they till mid January 2004, neither informed the Department about this activity, nor applied for service tax registration, nor paid the service tax. No valid reason has been given by the appellant for their failure to obtain service tax registration during the period of dispute or at least inform the Department about their activity. Therefore, penalty under Section 78 has been rightly imposed on the Appellant.(Para 7.2).There is no reasons to interfere with the impugned order. The appeal is dismissed.(Para 8)

Service Tax: Refund: The assessees have obtained opinions from the Indian institute of Technology, Chennai, Anna University, Chennai, Software Technology Park of India that the service rendered by them is not “software Engineering Service”; however, these opinions were not considered.(Para 4). In the light of the above the service rendered by the assessees is “Consulting Engineer’s Service” and consequently their claims for refund are admissible and, therefore, answer to the impugned issue relating to claim under Rule 5 of Export of Service Rules, 2005 read with Notification No. 12/2005-S.T. dated 19.04.2005, is in favour of the assessees.(Para 5). The impugned orders are set aside and remand other issues for fresh decision to the adjudicating authority.(Para 6).

Service Tax: Consulting Engineer service: Demand: The respondent has undertaken the activity of erection and commissioning of machinery and Revenue wants to classify the same under 'consulting engineer service'. In this regard, Board vide circular dt. 13/05/2004 clarified that prior to 01/07/2003, the installation and commissioning are not covered under the category of 'consulting engineer service'. There are no merit in the case of Revenue. In respect of the commission collected for liaison activity, the service is provided to a foreign client abroad which comes under the export of service, hence there is no infirmity in the impugned order whereby the Commissioner (Appeals) has held that the service is export of service. In view of the above, since there are no merit in the appeal filed by the Revenue, reject the same.(Para 4).

Service Tax: Consulting Engineers Service: Service Received from abroad: Section 66A: When specific charging provisions came to statute book later which was not embedded to Section 68(2) of Finance Act, 1994 following the Apex Court’s Judgement in the case of Martin Lottery reported in STO 2009 SC 857, the appeal of the appellant is allowed. (para 3)

Service Tax: Commercial or Industrial Construction Services: Refund: The service in the present case stands provided by the sub contractor through the main contractor i.e. appellant. It stands clarified by the Board in (a) TRU letter F. No. 341/18/2004-TRU (Pt.) dated 17.12.2004 (b) Circular No. 23/3/97-ST dated 13.10.1997 (c) Master Circular No. 96/7/2007-ST dated 23.8.2007 that there cannot be double taxation in cases where services are rendered by a person through another person to the ultimate consumer as long as the main person who has the contract with the customer is paying the service tax on the gross amount. (Para 5). The impugned order is set aside and matter remanded to original adjudicating authority to verify the appellant's claim of refund(Para 7). 

Service Tax: Consulting engineer service: Taxable event: Demand: The scope of service tax was extended to cover the technical inspection and certification service only with effect from 1.7.2003 and, therefore, respondents are liable to pay service tax in respect of the service only with effect from 1.7.2003. The appeal filed by the Revenue is dismissed.(Para 4). 

Service Tax: Consulting Engineer service: Liability under Service tax: The definition of the ‘Consulting Engineer’ as per Section 65(31) of the Finance Act, 1994, which has been amended w.e.f. 1-5-2006 and the charge of service on service received from out side India, which is under Section 66-A of the Act, has been amended w.e.f. 18-4-2006.(Para 7). The respondent herein is a foreign company who is a service provider and only from the date of the aforesaid amendments, the service receiver would be liable to pay the service tax and that the respondent/assessee is not liable to pay any tax prior to amendment i.e., for the period in question 1-4-1999 to 31-3-2001. Following the decisions of this Court in CEA No. 11/2007 STO 2010 Kar 594 and CEA No. 12/2007 STO 2010 Kar 596 The substantial questions of law raised in this appeal are to be answered against the revenue.(Para 8). Revenue appeals dismissed. 

Service Tax: Consulting Engineer Service: Export of Services: Contention raised by the appellant that any transfer of technical know-how is per se not covered within the ambit of consulting engineers’ service and the same is presently covered by ‘Intellectual Property Rights’, which was introduced as a taxable service only on 10.09.2004. Further, it was pointed out that, even if it is assumed that the appellant rendered a taxable service to the foreign companies, it is a case of export of service. As the same was not considered by the learned Commissioner, matter is remanded back.

Service Tax: Consulting Engineer Service: Intellectual Property Right Service: Penalty: Reasonable cause for delayed payment of Service Tax: Revenue issued a show-cause notice proposing levy of service tax under "Consultancy Engineer Service" and also a notice proposing levy of service tax under & "Intellectual Property Right Service". In these circumstances, it cannot be said that the assessee willfully suppressed the fact of non-payment of tax with intention to avoid payment of duty. In the case of Hyundai Motors (supra) protection under Section 80 of the Finance Act, 1994 was extended to set aside the penalty imposed. Following the same route in this case, the penalty imposed upon the assessee is set aside under the provisions of Section 76 as the assessee had reasonable cause for delayed payment. (para 3)

Consulting Engineer Service: Stay: The issue involved is, whether the activity of mere supply of drawing and designs is covered under the category of "Consulting Engineer". In view of Kirloskar Electric Co. Ltd STO 2006 CESTAT 520 prima facie it is a strong case. Stay granted.

Consulting Engineering Service: Valuation: The designs and drawings which are part of the contract are treated as goods by the Customs Authorities and were assessed under the Customs Act therefore the finding that the same are service is not sustainable and requires re-consideration. The impugned order is set aside and the matter is remanded to the adjudicating authority for de-novo adjudication.

Service Tax: Consulting Engineers Service: Refund: Unjust enrichment: The ground that the appellants availed of the same as Cenvat credit is also not sustainable as the appellants vide letter dated 28.8.2004 informed the department that they had re-paid the said availed service tax along with interest to the department it cannot be said by any stretch of imagination that the burden of service tax amount to be refunded has been passed on to any other person or customers as service tax has gone in the excisable goods sold by the appellants. The grounds of appeal do not disclose any reason for disagreeing with the factual findings by the Commissioner (Appeals). Further, no averments have been made as to why the decision of the Tribunal in the case of Hexacom (I) Ltd. is not applicable to the facts of the present case as held by the Commissioner (Appeals). In view of the above, no valid grounds have been adduced to interfere with the decision of the Commissioner (Appeals). Therefore, the appeal of the Department is rejected. Cross-Objection by the respondents which is basically in support of the order of Commissioner (Appeals) is also disposed of. (para 6.1, 6.3,7)

Service Tax: Consulting Engineers Service: Service tax was not applicable on the technical know-how and the appellants on the insistence of the department paid the same from their own pocket even being service receivers and nor service providers. (para 6.1)

Consulting Engineer: Penalty: The appellant was regularly paying Service Tax and suddenly discontinued the same and he did not take any remedial action or he did not even inform the department. Under these circumstances, penalty under Section 76 and Section 77 have to be imposed. Appeal filed by assessee rejected.

Service Tax: Services of testing software or auditing software provided by the respondents is not liable to service tax: Scope: The appellants are providing services in the disciplines of computer software engineering and Notification 04/99-ST dated 28.2.1999says that such services are correctly classifiable under Consulting Engineer's service. This was further made clear by expanding the definition of related taxable service and an Explanation inserted thereafter. The specific services rendered by the appellants were exempted under Notification 04/99-ST dated 28.2.1999 till 10.9.2004. Thereafter, till 01.6.2007, it remained excluded from the taxable service as per the definition of taxable service provided under Section 65(105)(g) of the Act which read as "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 including the discipline of computer hard-ware engineering but excluding the discipline of computer software engineering". The read of the Notification and the definition of the taxable service in relation to consulting engineer's service make it crystal clear that the services related to computer software engineering was not taxable till 01.6.2007(Para 1,2).

Revenue appeal rejected.

Service Tax: Consulting engineer service: Activities of processing of raw material, periodical testing of raw materials, finished products, exercising quality control and maintaining machinery used for manufacture of dry cement paints: It is clear that what the assessees are providing is testing service. Any testing service would include noticing of defects and requirement of pointing out that the defect has to be set right cannot be held by any stretch of imagination to be advice or consultancy and would not come under the purview of consulting engineer service. The reliance placed by the Commissioner in the case of Nokia (I) Pvt. Ltd. Vs. Commissioner of Customs, Delhi-STO 2006 CESTAT 79. (Para 1).

Appeal allowed.

Service Tax: ‘Consulting engineers service’ for the period prior to 10.9.2004: Scope and liability: Transfer of technical know-how to a person in India from abroad became liable to service tax only with effect from 10.9.2004 which is subsequent to the period in dispute in this case. This plea has been raised for the first time before the Tribunal and requires to be considered in the light of the decision of the Hon'ble Bombay High Court in Indian National Shipowners Association Vs. Union of India - STO 2009 Bom 78 and the decision of the Delhi High Court in Unitech Ltd. Vs. Commissioner of Service Tax, New Delhi - STO 2009 Del 1741 hence matter remitted for fresh decision to the adjudicating authority(Para 2).

Appeal allowed by way of remand.

Service Tax: Consulting engineers service: Jurisdiction to remand: Hon'ble Supreme Court's judgment in MIL India Ltd. vs. CCE, Noida CEO 2007 SC 25, wherein Their Lordships considered the amendment brought to Section 35A of the Central Excise Act by the Finance Act, 2001, which came into force on 11.5.2001, and held that the power of the Commissioner (Appeals) to remand matters back to the adjudicating authority for fresh consideration had been withdrawn with. effect from 11.5.2001. Commissioner (Appeals) remanded the case to the original authority and directed him to quantify the amount of service tax leviable. It appears, the penalty-related issue was also left to be reconsidered and decided upon by the lower authority. To this extent, the learned Commissioner (Appeals) exceeded his jurisdiction.

Consulting engineers service: Scope and liability: In this appeal, the assessee has taken a plea that they are not liable to pay service tax in respect of any amount collected from the consumers of electricity during the period of dispute. The infrastructure was brought in place at the cost of the consumer's. It has therefore to be held that the service rendered by the appellant through their electrical engineers to the consumers of electricity fell within the ambit of "taxable service" under Section 65(105)(g) of the Finance Act, 1994. It goes without saying that the electrical engineers of the appellant were acting as "consulting engineers" within the scope of the definition given under Section 65(31). The appellant argued that they were rendering a service to themselves inasmuch as the infrastructure (immovable property) belonged to the appellant. The infrastructure consisting of the electric poles, transmission line and accessories thereto was brought in place by the consumers of electricity at their cost. It might have vested in the appellant after its installation. During the course of installation of the infrastructure by the consumers of electricity, the appellant could not claim any title thereto. The taxable service was rendered during the course of installation. Even otherwise, the ownership of the property has no bearing on the question whether the appellant was rendering a taxable service as "consulting engineers", to the consumers of electricity. In the result, this appeal allowed by way of remand to the Commissioner (Appeals). Accordingly, Commissioner (Appeals) to quantify himself the service tax leviable from the appellant in respect of the supervision charges collected by them from the consumers of electricity during the period of dispute as also to reconsider and decide upon the question whether any penalty is imposable on the assessee and, if so, to what extent.(Para 3,4).

Appeal allowed by way of remand.

Service Tax: Royalty for consulting Engineering Services: Liability: The case is of payment of lumpsum royalty and that too payment was made to THS, Thailand since para 4 of ground of appeal challenges as under:- "That the supply of technology, non transferable and non exclusive right and licence to manufacture sale and distribute the Hard Coat Production Engineering do not come within the definition of "Consulting Engineering Service".(Para 1,3).

Stay allowed.

Service Tax: Whether the appellants are entitled to refund of the service tax paid by them on the royalty amounts paid to their foreign collaborators for the period 01/01/2004 to 09/09/2004: Scope: The appellants filed a claim for refund of service tax paid for the period prior to 10/09/2004, on the strength of certain decisions of this Tribunal to the effect that transfer of technical know-how was not in the nature of consulting engineer's service. The appellants chose to de-recognise the service received from abroad as consulting engineer's service, and they chose to designate the same as intellectual property service. This claim for refund was rejected by the original authority on merits as well as on the grounds of limitation and unjust enrichment. The agreement provided for visit of technical experts deputed by the foreign company to the manufacturing facility of the appellant for the purpose of rendering technical assistance. With reference to the definition of "consulting engineer" given under Section 65 of the Finance Act, 1994, any payment made for the technical assistance rendered to the appellant by the foreign company is chargeable to service tax in the category of consulting engineer's service. The appellants voluntarily paid service tax in the category of consulting engineer's service, on the royalty paid by them to the foreign company during the material period. All their assessments during the entire period were in their capacity as recipient of consulting engineer's service and no assessment has ever been altered. Whether prior to 10/09/2004 or thereafter, all these transactions were under the same agreement. In the circumstances, it is not open to the appellants to deviate from their stand that they were not receiving consulting engineer's service from abroad under the agreement.(Para 4,5).

Appeal dismissed.

Service Tax: Consulting Engineering Services: Scope: Waiver of pre-deposit and stay: The appellants were rendering services under the category of ‘Consulting Engineering Services’, which was suppressed from the Department and could be detected only on scrutiny of their Profit and Loss Accounts covering the financial years 1999-2000, 2000-2001 and 2001 -2002. The appellants have contended that the services in dispute were offered to the United Nations Development Programme and vide Notification No.16/2002-ST dated 02.08.2002, these were exempted. However, this plea of the appellants does not appear to be acceptable. In terms of Notification No. 43/1998 dated 28.04.1998, the Consulting Engineers were not exempted from payment of service tax, even if they were providing services to the United Nations or any International Organization. It is only after the introduction of Notification No.16/2002-ST dated 02.08.2002 (which superseded Notification No. 48/1998 dated 28.04.1998) that all services were extended the benefit of exemption from service tax if services are provided to the United Nations or any International Organization. The dispute in the instant case relates to the period from 1999 to 2002. Hence, Notification No. 48/1998 dated 28.04.1998 will apply and the appellants are not entitled to exemption. The appellants are, therefore, liable to pay the service tax for the impugned period which is prior to 02.08.2002.

Pre-deposit ordered.

Service Tax: Taxable service provided by a non-resident or from outside India, who does not have any office in India: Leviability of Service Tax on the service recipient prior to 01.01.2005: The decision of the Larger Bench in the case of Hindustan Zinc Ltd. Vs CCE, Jaipur - STO 2008 CESTAT 321 wherein an identical issue was decided and the question was decided in favour of the assessee. The taxable service provided by a non-resident or from outside India, who does not have any office in India, having been specified as 'taxable service' with effect from 01.01.2005, under Notification No. 36/2004, recipient of such service could not be held liable for paying service tax prior to 01.01.2005 notwithstanding the amendment in Rule 2(1)(d) of the Service Tax Rules under Notification No. 12/2004 (Para 1,4).

Appeal allowed.

Consulting Engineering Service v/s Technical know-how. Achieving economies in the manufacture, consolidating marketing and other activities as a result of the sale of technical know-how can amount to providing consultancy and advice can not be classified under the category of consulting engineering service. The agreement is nothing but a sale of technical know-how and does not amount to rendering of any consulting engineering service. Revenue appeal  is dismissed.

Service Tax: Consulting Engineering during the period from January 2004 to July, 2004: Tax paid by mistake on payment made to the foreign based company, who have no office in India: Refund: The issue as to whether recipient was liable to pay service tax on the services received from abroad prior to 1.1.2005, was referred to the Larger Bench. The Larger Bench decided the issue as reported in STO 2008 CESTAT 321, and answered in favour of the assessee and it is held that as a recipient of the ‘consulting engineer' service from outside India, the appellant was not liable to pay service tax prior to 1.1.2005. In view of the Larger Bench decision of the appellants own case, the appellant is not liable to pay service tax. On perusal of the aforesaid decision, it has been held that the appellant deposited tax to the Government without remitting to the foreign company not to be refunded. The issue was decided after examining the agreement. In view of that, the impugned order is set aside and matter is remanded to the adjudicating authority to decide the refund claim(Para 6).

Matter remanded.

Service Tax: Engineering Consultancy received by them from abroad during 2003-04: Scope and liability: The dispute relates to liability of appellants to pay tax on Engineering Consultancy received by them from abroad during 2003-04. The orders of the lower authorities were passed relying on the provisions contained in Rule 2(1)(d)(iv) of the Service Tax Rules, 1944. In Hindustan Zinc Limited case Vs. CCE, Jaipur reported in STO 2008 CESTAT 321 the Larger Bench of this Tribunal decided that a recipient of taxable service from abroad was liable to pay service tax only by issue of Notification No.36/2004 dated 31.12.2004. As the material period when the impugned service was received is prior to 31.12.04, the impugned demand is not sustainable.(Para 3).

Appeal allowed.

Management Consultancy v/s Scientific or technical Consultancy Services: Advice, consultancy or technical assistance  falls under the category of management consultant and not under the scientific or technical consultancy and hence chargeable to Service Tax -  The income received from such services  reflected in the annual balance sheets - no suppression or  mis-statement -  part of the demand  hit by limitation.

Service Tax: Consulting Engineers" service for the period 7.7.97 to 15.12.02: Scope and liability: The Larger Bench of the Tribunal in the case of Hindustan Zinc Ltd. vs. C.C.E. Jaipur - STO 2007 CESTAT 1406 held that service recipient of consulting engineers service by a non-resident or from outside India is not liable to pay service tax prior to 1.1.2005. Where the service provided by outside India or non-resident, who does not have any office in India, the provider of the service cannot be fastened with the liability. In the present case, Appellant has no office in India and therefore, the service tax demand is not sustainable on them. (Para 4,5).

Appeal allowed.

Taxability: Service provided by non resident from abroad not taxable prior to 1.1.2005.

Penalty: The appellant discharged the service tax liability along with interest immediately after the lapse was pointed out. The imposition of penalties under Section 78 and 76 appear to be very harsh.

Consulting Engineer Service: Agreement shows entire project sold out by appellants: Not taxable under specified service.

Service Tax: Consulting engineering services: Activity of construction of buildings, roads, fly-overs etc.: Remand: Taxable value: The buildings, roads etc. were constructed for Government Departments and for public utilities and not for commercial purposes. Appellants, state that only 1.8% of the amounts charged from the clients represents the amount for rendering consulting engineering services and therefore, the demanded amount confirmed by the Adjudicating Commissioner is grossly disproportionate and that the Appellants can produce necessary documentary evidence before the Adjudicating Authority to prove that the value of consulting engineering services amounts to only about 1.8% of the total value of the contracts. Matter remanded to the Adjudicating Commissioner to allow the Appellants to produce necessary evidence with a view to bifurcating the amount attributable to consulting engineering service charges and for quantifying the Service Tax leviable thereon.(Para 3,5).

Appeal allowed by way of remand.

Service Tax: Provided technical consultancy during the period from 30/06/01 to 16/08/03: Consulting engineers: Scope: The appellant, a company engaged in manufacturing activity and who occasionally provided technical consultancy to some persons, are covered by definition of "consulting engineers" during that period. The issue involved in this case is squarely covered by this Tribunal's decision in the case of Shakumbari Sugar & Allied Ind. Ltd. vs. CCE, Meerut-I reported in STO 2006 CESTAT 716, wherein the Tribunal held that mere employment of engineers would not make an organization an engineering organization, that engineering firms are a separate category altogether from general industrial organizations and they derive their separate and particular identity from the specialized engineering knowledge flowing from the employment of engineers and normal work undertaken by them and that when the assessee's identity is a sugar manufacturer and not as engineering firm and the revenue also flows mostly from sugar manufacturing and selling and not from engineering service, providing technical consultancy in a stray cases would not make the assessee an engineering firm. This judgment of the Tribunal has been followed in the case of Shree Sidhball Steel Ltd. vs. CCE, Meerut STO 2007 CESTAT 470. The judgment of Hon'ble Calcutta High Court in case of M.N. Dastur & Co. Ltd. vs. UOI (Supra) is not applicable to the facts of this case as in that case the issue involved was whether the expression - "Engineering firm" used in the definition of "consulting engineers" includes a company. In view of this, the appellant were not covered by the definition of "consulting engineer" during the period of dispute and hence they were not liable to pay any service tax.(Para 5).

Appeal allowed.

Service Tax: Consulting Engineer: Scope and liability: The appellants imparted technical knowledge to modify the existing machinery of LMW suitable for manufacture of licensed product, know-how for their manufacture, right to use brand of Day International and to sell the products. The package also included the training of LMW personnel. In the application of technical knowledge received from the foreign collaborator the royalty payment is recognized as a share of the profit earned through the use of the technical know-how, expertise and technical advice, training in marketing of LMW staff etc. This payment of royalty is not for any service received by LMW. Tax can be demanded only on the tax base relatable to taxable activity. In this case demand covers other activities found to be not taxable service. This is not acceptable. In any case, technical advice, technical assistance, training etc. imparted incidentally in the process for achieving their dominant objective of manufacturing the licensed product as per the agreement cannot be identified as constituting Consulting Engineer Service. Royalty is paid mainly for the technical know-how /intellectual property received from Day International. Therefore, the impugned order is not sustainable. Decisions in the following cases are supportive viz. Yamaha Motors (I) Pvt. Ltd. Vs. CCE, Delhi-IV STO 2005 CESTAT 379, Bajaj Auto Ltd Vs. CCE STO 2004 CESTAT 11, M/s. Navinon Ltd. Vs. CCE, Mumbai-VI STO 2004 CESTAT 87 and Bajaj Auto Ltd. Vs. CCE & C, Aurangabad [2004 (65) RLT 857 (CESTAT-Mum)] (Para 6).

Appeal allowed.

Service Tax: Consulting Engineer's Service" for the period from 1999 to 2003: Royalty paid to foreign technical collaborators, from whom technical know-how was received: Scope and liability: The question whether service tax is leviable under the above category on such royalty is already settled by the line of decisions compiled in a booklet, a copy of which is available today to the ld.JDR. The counsel has also furnished today a copy of the Technical Know-how Transfer Agreement(Para 1,2).

Stay granted.

Matter Remanded Back:  Commissioner passed the order without considering the submission of the Appellant. Thus the impugned order is set aside and the matter is remanded back to decide afresh after considering the submission of the Appellant.

Service Tax: Consulting engineer’ service: Recipient of taxable service provided by a person who is a non-resident or is from outside India, and does not have any office in India: Scope and liability: The taxable service provided by a non-resident or from outside India, who does not have any office in India, having been specified as ‘taxable service’ with effect from 1-1-2005, under Notification No. 36/2004-S.T. dated 31-12-2004, recipient of such service could not be held liable for paying service tax prior to 1-1-2005 notwithstanding the amendment in Rule 2(1)(d) of the Service Tax Rules under Notification No. 12/2002-S.T., dated 1-8-2002. The view expressed in the cases of Aditya Cement Vs. CCE, STO 2007 CESTAT 14 and Ispat Industries Ltd. Vs. CCE, STO 2007 CESTAT 273, are supportive. The issue is thus answered in favour of the assessee and it is held that as a recipient of the ‘consulting engineer’ service from outside India, the appellant was not liable to pay service tax prior to 1-1-2005.(Para 17,18).

Referance is answered.

Service Tax: Consulting Engineer's Service: Scope & Liability: Appellants paid to their technical collaborators royalty as percentages of ex-factory sale price of their finished goods in India and that service tax on such amount was not leviable prior to 10.9.2004. The date on which transfer of intellectual property right was introduced as a new taxable service. The learned counsel has cited a plethora of decisions of the Tribunal holding that transfer of technical know-how was not to be taxed as 'consulting engineer's service' for periods prior to 10.9.2004.(Para 1).

Stay application allowed.
 

Service Tax: Consulting Engineer service: Service provided under agreement for permission to use trademark is covered under Intellectual Property service: The service provided under the agreement - by way of permission to use the trademark - would at best fall under the definition of Intellectual Property Rights service and not under the Consulting Engineer Service as defined in clause (31) of Section 65 of the Finance Act, 1994. Under the said clause, service rendered by way of advice, consultancy or technical assistance alone can be called service provided by a consulting engineer, and, therefore, the impugned demand by way of service tax towards Consulting Engineer Service allegedly provided by the appellant is not maintainable.(Para 1,3).

Stay application disposed off.

Service Tax: Consulting Engineer service: Service tax liability on royalty for transfer of know-how: The appellant is the recipient of the service. According to the appellant, the transfer of know-how is not taxable. On ‘technical assistance’ part, for payment of fees since 16-8-2002, as a recipient of service, it has already discharged the tax liability for services provided in India. As regards payment of royalty, no service tax is payable. In this regard, reliance is placed on Indian Farmers Fertiliser Co-op. Ltd. v. Commissioner of Central Excise, Bareilly (U.P.) [STO 2006 CESTAT 865].(Para 1,3).

Stay allowed.

Consulting Engineer: Appellants filed appeal against Order rejecting refund claim, as they  implemented the coordination agreement The agreement involved HCCL undertaking work of engineering design as well as construction of TWP. HCCL did not render engineering consultancy to NTDCL. Therefore the impugned amount of service tax HCCL paid as Consulting Engineer was not due to be paid.

Consulting Engineer Service: As the equipments are designed and manufactured by the respondents (themselves), no Engineering Consultancy is involved in such manufacture. Erection and commissioning of the fire-fighting equipment, were taxable under the category of Commissioning and Installation Service and not under heading Consulting Engineer Service.

Consulting Engineer Service : No technical assistance in any manner in one or more disciplines of engineering was rendered to the appellants by professionally qualified engineers of the foreign company.  Apparently, the service in question in the instant case is an intellectual property service on which service tax was not leviable prior to September, 2004. The demand for service tax on the entire amount of royalty paid by the assessee to the foreign Collaborator without providing any break-up. This is also not permissible law. Order set aside appeal allowed.

Coverage of service : Even if the services are within the purview of Service Tax but if they do not conform to the alleged service in the show cause notice, then no Service Tax is payable.
Out of Pocket expenses : With regard to the ‘Out of pocket expenses’, the DGFT and Board have clarified that ‘out of pocket expenses’ reimbursed on actual basis are not includible in the value of the Service Tax.

‘Consulting Engineer Service’ : Service rendered by any professionally qualified engineer or a firm of engineers.

Consultancy Engineer : Work Contract : The appellants were executing works contracts awarded by their clients and they were doing so by making use of their own machinery, materials, human resources and money. The works were executed on the basis of the approved plan and design furnished by the client. Upon completion of the work, the building with its site was handed over to the client against full payment of consideration for the work. In this exercise, the Revenue has not brought out any advice, consultancy or technical assistance in any manner having been rendered by the appellants to their clients in any discipline of engineering. Had the appellants been shown to be professionally qualified engineers and to have rendered such advice, consultancy or technical assistance to their clients to enable them to execute such works, the position would have been different. It is not disputed that the works contract became taxable service for the first time on 1-6-07 only. The conduct of the party cannot make an event a taxable service where it is actually not.  Appeal fully allowed.

Operation & Maintenance : Consulting Engineering Service : The appellant entered into an Operation and Maintenance Agreement (O & M Agreement) with M/s. GVK Industries Ltd. for Operating and Maintenance of 235 MW Mixed Fuel Based Combined Cycle Power Plant. The Revenue proceeded against them on the ground that the appellants rendered the services of ‘Consulting Engineering Service.’ Issue no longer res integra decided by Tribunal in Rolls Royce Industrial Power (I) Ltd and followed in other cases.

Consulting Engineering Service: Stay: Recipient of technical know-how from foreign company against payment of royalty, where such recipient was not the authorised representative of the foreign company in India, was not liable to pay service tax in the category of “Consulting Engineers’ Service” in terms of Rule 2(1)(d)(iii) of the Service Tax Rules, 1994. Prima facie case made out relying on various case law of Tribunal, full waiver granted.

Technical know how : It is settled law that transfer of technical know-how cannot be classified as Consulting Engineers’ Service.

Stay : The departmental authority concerned to show that technical assistance was rendered by a consulting engineer to the assessee in any discipline of engineering, so as to enable the Revenue to demand service tax on the gross amount paid as consideration for such service. No such evidence brought on record. Prima facie case made out. Full waiver.

Demand : Revenue has not established that the charges collected relate to any excisable goods and therefore in the absence of evidence no excise duty can be collected. It should be borne in mind that the burden of proof is on the Revenue. Appellants contend that these invoices were for having rendered Consulting Engineer Service. Appeal allowed.

Consulting Engineer: Erection, Commissioning & Installation Service: Electrical Contractor : The appellant is not a qualified engineer and the services of erection came into taxable net only with effect from 10-9-2004 and services relating to electrical wiring came into service tax net only with effect form 14-5-2005. Since the period involved in the present case is prior to that period namely 1-7-2003 to 31-1-2005 in respect of commissioning, installation and erection, demand confirmed is not sustainable.

Consulting Engineer : Stay : Royalty paid in respect of transfer of technical know how service Prima facie covered under the scope of Consulting Engineer. Stay partly granted.

Stay : Consulting Engineer Service : The activity such as survey of the project area to identify suitable location is not a consultancy engineering service. Prima facie case made out.

Consulting Engineer Service: The invoices raised by the appellant unit in respect of the services rendered by them, prove that all these activities come within the scope of 'Consulting Engineer Services' as clarified by the CBEC in their Circular issued in the year 1997. Moreover, the Daelim's case would not be applicable because in the present case, there is a clear demarcation of charges for the various services rendered by them. The contention that the appellants are only a manufacturing firm and, therefore, they cannot be brought under the Service Tax net is also not sustainable, as the appellants employ highly trained professional engineers and in the course of the execution of their work, they render various services which amount to Consulting Engineer services. Equal amount of penalty imposed in Order-in-Revision is set aside.

Service Tax: Consulting engineer service: Demand: The contention is that design and engineering of the goods manufactured by the applicant is part of manufacturing. The applicant relied upon the decision of the Tribunal in the case of Daelim Industrial Co. v. CCE reported in STO 2003 CESTAT 9 where the Tribunal set aside the demand of Service Tax which was raised on the same ground. The contention is that appeal filed by the Revenue was dismissed by the Hon'ble Supreme Court. The applicant also relied upon the decision of the Tribunal in the case of CCE v. Larsen & Toubro Ltd. reported in STO 2006 CESTAT 296 where the demand raised on the similar issue was set aside and also relied upon other decisions of the Tribunal. The Revenue relied upon the decision of the Tribunal in the case of CCE v. BSBK P. Ltd. reported in STO 2006 CESTAT 207 and in the case of Indian Farmers Fertilizer Co-Op. Ltd. v. CCE reported in STO 2006 CESTAT 865 when contrary view is taken. As there are contrary opinions of the Tribunal on the same issue, therefore, prima facie, the applicant had a strong case in their favour.(Para 4,5,6).

Pre-deposit waived, stay allowed.

Service Tax: Consulting Engineer: Scope and liability: The issue is fully settled in assessee's favour in terms of the following Tribunal rulings. : (i) Biocon Ltd. v. CST, Bangalore - STO 2007 CESTAT 584 (ii) CCE, Bangalore v. M/s. Toyoda Iron Works Co. Ltd. by Final Order No. 734/2007, dated 28-6-2007 STO 2007 CESTAT 180. Tribunal while allowing the appeal on an identical issue referred to large number of Tribunal rulings deciding the issue in assessee's favour. The ratio of the judgment is that Service Tax is not leviable when a foreign company has transferred technology to the Indian Company for valuable consideration, in view of the cited judgments, there is no merit in this appeal(Para 3).

Revenue appeal dismissed.

Consulting Engineer Service : The adjudicating authority has not met the challenge raised by the appellants in the reply to the Show Cause Notice to the effect that the appellants did not conform to the definition of ‘Consulting   Engineer’ in the   Act. They   were   neither provisionally qualified engineers nor were they a firm of engineers, rendering engineering consultancy service.

Penalty on foreign company : Cannot be imposed for services provided in India.

Service Tax: Refund: The issue is covered by the two decisions of the Tribunal namely Jindal Steel reported in STO 2006 CESTAT 51 and Vikram Cement v. CCE, Indore reported in STO 2007 CESTAT 549. As per the; agreement between the appellant and the foreign Consultant, the present appellant had paid the tax on behalf of the foreign Consultant. Therefore, as the service tax is payable and rightly paid, the appellants are not entitled for refund.(Para 3,5,6).

Appeals dismissed.

Consulting Engineering Service: Installation and commissioning was not subjected to Service Tax during the period 7-7-1997 to 10-10-1997. Stay granted.

Service Tax: Liability on recipient of the service from foreign country: Sub-clause (iv) to Rule 2 (1)(d) was effective w.e.f. 16-8-2002 and there is nothing in the said rule to suggest that the same would operate retrospectively. Admittedly, the services were availed during the period from Nov. 2001 to March 2002. At that point of time, there was no provision for payment of tax by the recipient of services, from the foreign country. Merely because the payment for such services was raised and settled in Sept.'2003, can not be made a ground for making the appellant liable to pay tax. For the above proposition, Tribunal's decision in case of Cadbury India Ltd. v. CCE, Mumbai reported in STO 2005 CESTAT 254 is supportive.(Para 2).

Appeal allowed.

Service Tax: Consulting Engineer: Scope: Appellant was engaged by M/s. Nagammal Mills Ltd. for supervising electrical works from 1993. The remuneration paid to him by the company was accounted as 'retainer allowance' in the accounts of the company for the material period. The gross amount on which Service tax is demanded by the authorities, is the money received by the appellant from the company as the above allowance. The appellant was retained by the company against a 'retainer fee' for the purpose of supervising the electrical works in the Electrical Department of the company. The transaction between a 'service provider' and a 'service recipient' must be on principal-to-principal basis. This basic requirement does not appear to have been satisfied in this case.(Para 4,5).

Appeal allowed.

Service Tax: Transfer of technology by foreign company: Consulting Engineer: Payments of royalty in the common parlance are not insisted as payment for a service provided. It is understood as a share of product or profit reserved by owner for permitting another the use of his property. Royalty payments in the present case for the use of technology and know-how cannot be equated with any services to be provided to the appellants and therefore, the order of the lower authorities attracting a levy of tax on royalty payments made are required to be set aside. Supporting case laws : (i) BEL & Ors. v. CCE - Final Order No. 1061 to 1063/2006 dated 15-6-2006. (ii) CCE v. Rubco Sales International P. Ltd. - STO 2005 CESTAT 170 (iii) Amco Batteries Ltd. v. CCE - STO 2005 CESTAT 10 (iv) CCE v. Micro Finish Valves (P) Ltd. - STO 2005 CESTAT 128 (v) Yamaha Motors (I) P. Ltd. v. CCE - STO 2005 CESTAT 379 (Para 3,4).

Revenue appeal rejected.

Service Tax: Consultancy Engineer: Scope and liability: This very issue was gone into great detail by the Tribunal in the case of Daelim Industrial Co. Ltd. v. CCE, Vadodara - STO 2003 CESTAT 9 wherein it has been explicitly held that work contract is not liable to Service tax under the heading of "Consulting Engineer". The Counsel referred to the identical terms of contract as in the present case and submits that the entire Tribunal ruling will be applicable. The same view was expressed by the same Delhi Bench in the case of Rolls Royce Industries Power (I) Ltd. v. CCE - STO 2004 CESTAT 102. The authorities below were not justified in not applying the ratio of the Tribunal rulings. Following the ratio of the Tribunal rulings, the impugned order is set aside (Para 3,5).

Appeal allowed.

Service Tax: Sale of IPR whether amount to consultancy service: Duty demand has been raised by treating "Technical Know-how" transfer as attracting service tax under the heading "Consulting". Know-how transfer is sale of intellectual property and not the rendering of service. Appellant's contention goes to the root of the case and has not been considered properly by the lower authorities. The case is remanded to the original authority to consider the issue of taxability.(Para 1,4).

Appeal disposed of.

Service Tax: Engineering consultancy service: Scope and liability: None of the orders of the authority below demonstrated specific nature of activity out of the annexure that was falling under the class "consulting engineer" services nor the orders considered whether the activities carried out by the appellant were a segment of the turnkey project of setting up of a sinter plant which was required by NINL. The agreement shows that in order to set up the sinter plant, NINL had taken assistance of the principal contractor M/s. Chine Iron and Steel Industry and Trade Group Corporation (CSGC) and the appellant was its sub-contractor answerable for the performance of the main contract in term of consortium arrangement between the principal contractor of abroad and the Indian partner through a consortium agreement. The undisputed performance guarantee of the plant was of the principal contractor. This is sufficient to indicate that the purpose of the contract was to set up a sinter plant instead of the service rendered solely as consulting engineer. The principal project was a turnkey project and not disputed by both the parties. It was also not disputed that rendering of service was a part and parcel of such project. Rendering engineering consultancy being a secondary object of the principal object of setting up of a sinter plant, the appellant is not disentitled to get the benefit of judgment in Daelim Industrial Company Ltd. v. CCE - STO 2003 CESTAT 9 case in view of composite contract executed by a Consortium.(Para 5).

Appeal allowed.

Consulting Engineer Service: Board’s Circular states that service provided beyond the territorial waters will not attract service tax. This circular will be relevant till the amendment brought out in service tax laws by insertion of Section 66A w.e.f. 18-4-2006. The present case being prior to 18.4.2006, service tax not leviable. For onshore services provided the amount of taxable value to be considered cum-duty price, therefore, to be redetermined and restricted accordingly.

Goods Transport Operators: The requirement of issuance of show cause notice under Section 73 read with Section 71A cannot be diluted by applying "no prejudice" rule, because, proceedings cannot be undertaken under Section 73 without issuance of the show cause notice that would give an opportunity to the assessee to explain why the recovery should not be made for non-compliance of the amended provisions. Demand set aside.

Consulting Engineer: Transfer of technical know-how and assistance cannot be considered as falling within the ambit of Consulting Engineers.

Service Tax: Consulting Engineering Services: The definition of know-how as appearing in technical assistance agreement includes a broad spectrum of processes bordering the realm of intellectual property, viz., knowledge, data, experience, skills, know-how, methods, inventions, patents, models, formulae, recipes and specifications of materials, technical information, procedures, techniques besides, of course services relating to such property, it is hereby directed to make pre-deposit.(Para 4).

Pre-deposit ordered.

Service Tax: Engineering consultancy: Scope: The appellant's case is, prima facie, covered by the decisions in the case of Daelim Industrial Co. Ltd. v. Commissioner of Central Excise, Vadodara STO 2003 CESTAT 9 and Larsen & Toubro Ltd. v. CCE STO 2003 CESTAT 30 the Tribunal held that a works contract cannot be subjected to Service tax as engineering consultancy. It is also being pointed out that the decision in the case of Daelim Industrial Co. Ltd. remains confirmed by the Hon'ble Supreme Court. The new provision in the Finance Bill also would indicate that works contracts attract levy only after that provision is enacted. The present tax demand is, therefore, not sustainable.(Para 6).

Pre-deposit waived, stay allowed.

Service Tax: Consulting engineers: Transfer of technologies does not come within the ambit of Consulting Engineer: Scope and liability: The issue pertaining to receipt of royalty for technical know-how from foreign collaborator has been held to be not coming within the category of Consulting Engineer. The Tribunal, in the case of BST Ltd. v. CCE, Cochin - STO 2006 CESTAT 208, has followed the judgment of 5 rulings which are in assessees' favour. "4. The learned Advocate urged that this issue has already been covered by large number of decisions of the Tribunals including this Tribunal. She relied on the following decisions of the Tribunal wherein it has been held that the technical know-how given by the foreign collaborator would not amount to the services of the 'consulting engineer.' Hence, it was urged that the demands and penalties are liable to be set aside. I. Navinon Ltd. v. CCE, Mumbai-VI - STO 2004 CESTAT 87 II. CCE, Chennai-III v. Veleo Friction Material India Pvt. Ltd. - STO 2005 CESTAT 298, III. Pfizer Ltd. v. CCE, Mumbai - STO 2005 CESTAT 344, IV. Kerala State Electricity Board v. CCE, Thiruvananthapuram - STO 2005 CESTAT 320, V. Yamaha Motors (I) Pvt. Ltd. v. CCE - STO 2005 CESTAT 379. Moreover, Rule 6(1) of the Service Tax Rules has been amended w.e.f. 28-2-1999, according to which only an authorised agent of the foreign collaborator will be liable to pay the service tax. In the present case, the appellant is not an authorised agent and therefore, they are not liable for payment of tax under the provisions of Rule 6(1). (Para 2,3).

Revenue appeal rejected.

Service Tax: Consulting Engineer: Scope and liability: The meaning of 'technical assistance' should be understood ejusdem generis with the preceding expressions viz. 'advice' and 'consultancy'. The 'advice' is an advice only and does not involve any physical work. In 'consultancy' also, there is no physical work. Hence 'technical assistance' cannot involve any physical work such as repairs/maintenance/servicing. Apart from this, it has not been shown that the technicians deputed by the appellants for servicing of their clients' machinery were professionally qualified engineers so as to fall within the ambit of "Consulting Engineer" as defined under the Finance Act, 1994. In the result, it is held that the servicing done by the appellant's technicians did not involve any 'advice', 'consultancy' or 'technical assistance' and the same was not to be treated as a "Consulting Engineer's Service".(Para 3,4).

Appeal allowed.

Service Tax: Consulting engineers: Scope: Royalty paid in relation to technical know how transfer cannot be taxed under the heading consulting engineering. Reliance is also being made on the decision of this Tribunal in the case of Yamaha Motors (I) Pvt. Ltd. v. CCE, Delhi-IV (Faridabad) as reported in STO 2005 CESTAT 379.

Stay application allowed.

Service Tax: Consulting Engineer: Activity of conducting training to government customers on projects sponsored by UNICEF : Scope & liability : This issue is covered by the citation referred to by the learned Consultant as in the case of M/s. Water India Pvt. Ltd. v. CST by Final Order No. 1283/2006 dated 27-7-2006 STO 2006 CESTAT 847. The activity would come under the heading "Commercial Training and Coaching Services" with effect from 1-7-2003. The disputed period is earlier to this period. Therefore the Tribunal ruling would clearly apply to the facts of this case. It is also seen that the Commissioner has failed to notice the Ministry's instructions in F. No. B/II/3/98-TRU dated 7-10-1998. The Commissioner was not justified in taking a different view then the citation referred before him. (Para 4).

Appeal allowed.

Service Tax: Consulting Engineer: Scope: The appellant was not carrying on any activity which is coming under the category of Consulting Engineer. They procured order for preparing drawings as per specification and these drawings were sold on valuable consideration by discharging Sales Tax. There is a sale of goods involved in the matter and therefore the issue is covered by the judgments of the Apex Court rendered in the case of Bharat Sanchar Nigam Ltd. and Another v. U.O.I. STO 2006 SC 19 and in case of Gujrat Ambuja Cements Ltd. v. U.O.I. STO 2005 SC 734. Both the judgments have been referred by this Bench in case of Idea Mobile Communications Ltd. v. Commissioner of Central Excise, Trivandrum STO 2006 CESTAT 456. In terms of the Apex Court judgments and this Bench's order, the appellant's activity cannot be brought within the ambit of Consulting Engineer for levy of service tax.(Para 2).

Appeal allowed.

Service Tax: Consulting Engineering Services: Scope and liability: Show cause notice does not speak as to how the party was falling under the category of Consulting Engineer. The show cause notice has straight alleged that the assessee have rendered taxable services falling under the category of "Consulting Engineer". The Commissioner has noted that the party is accredited agent for a National Accreditation Board and they are authorized to certify their clients as to whether they fulfil the quality management systems requirements. This certificate is necessary for a unit to obtain certification under ISO 9001, etc. The Commissioner (Appeals) has noted that the party is only to visit units which need a certification as an ISO 9001 and examine their management system to find out as to whether they fulfil the requirement for the said certification. After due consideration of all the documents, the Commissioner (Appeals) has satisfied himself that the activity of the party does not come within Para 10 of the Circular No. 1/1/2002-S.T. dated 26-2-2002. Thus the assessee is not coming within the ambit of Consulting Engineer for the purpose of service tax.(Para 1,4).

Revenue appeal rejected.

Service Tax: Consulting Engineers’ Service : Refund: The appellant is a temporary employee of the company on contract basis for a period of one year. Furthermore, the nature of job clearly indicates as I.C. Engineering design, which clearly shows that the job is only with reference Integrated Circuit design engineering, which is more related to Computer Hardware. In addition, the certificate given by the so called client or the other party to the agreement dated 17-8-2006 clearly says that the appellant was working in ASIC Development as Hardware Engineer. No merit in the order of the lower authority, in rejecting the refund claim of the appellant. (para 5)

Consulting Engineer Service: the assessee is only paying royalty charges for the receipt of technical know-how. This royalty charges cannot be brought within the ambit of 'Consulting Engineer'.

Consulting Engineer Service: Department did not discharge its burden of proving that the firms in Germany and USA were engineering firms, so as to hold the appellants liable to pay service tax on services provided by foreign engineering firms, which is a pre-requisite for levying service tax on such services. In respect of taxable services provided by a person who is a non-resident or is from outside India, who does not have any office in India, such service was notified in the Official Gazette, in exercise of the powers conferred by sub-section (2) of Section 68 of the Finance Act, 1994 only on 31-12-2004 with the issue of Notification 36/2004-S.T. which came into force on 1-1-2005, while the period in the present case is prior to such date, and service tax is therefore not leviable for the period prior to 1-1-2005. Further, no service tax is payable under the category of consulting engineering services in respect of transfer of know-how.

Service Tax: Consulting Engineers: Application for COD: The new Director took charge of the affairs of the company in India on 31-1-2006. It is not the case of the appellants that they were not aware of the impugned order. The affidavit of the Executive Director merely states that he was not aware of the Rules and Regulations of Service Tax. It is well settled that Ignorance of law is not an excuse. The appellant is an incorporated company and they have advocates on their panels. They ought to have handed over the papers for taking steps to file the appeal. The delay of 197 days is enormous and no explanation is worth coming to condone the delay. It is not the case of the appellants that the company incorporated in India has only foreign employees and Indian employees are not available for advice, therefore, there is no merit in the contention of the Director, who has filed the affidavit. Gross negligence is patent on record. The learned Counsel relied on the judgments wherein the delay had been convincingly explained and there was no negligence. Therefore, the courts laid down the view that a pedantic view should not be taken when there is no gross negligence. In this case, there is gross negligence and appellant has not taken any steps to file the appeal at all, despite being aware of an order against them.(Para 4).

Appeal dismissed.

Service Tax: Waiver of pre-deposit: Applicants have made out a strong prima facie case on the ground that although the order of the Assistant Commissioner dealt with the issue as to whether the applicants are liable to pay Service tax at receiver of Consulting Engineer Services, in review, the Commissioner has proceeded to hold that they are liable to pay Service tax that they have received the services of Management Consultant, which is prima facie not permissible in view of the fact that the review order is required to be confined to point arising out of the order under review and also for the reason that for the period prior to 16-8-2002, the recipient of services is not liable to pay Service tax and also that the applicant cannot be considered as an agent of the foreign service provider.(Para 1,2).

Pre-deposit waived, stay allowed.

Service Tax: Consulting Engineers service: Scope: The appellants have received technical information and the foreign company has transferred technology by agreement. The revenue has proceeded to recover service tax on such receipt of information and technical know-how under the category of "Consulting Engineers". In terms of the judgments in the case of (1) Navinon Ltd. v. CCE STO 2004 CESTAT 87 (2) Pfizer Ltd. v. CCE [2005] 2 STT 77 (Mum. - CESTAT) etc. the Tribunal has clearly held that such transfer of technology will not come under the definition of "Consulting Engineers".(Para 2).

Appeal allowed.

Consulting Engineer Service: When a foreign concern transfers the technical know-how/technology, such transfer of service cannot come within the definition of Consulting Engineer Services.

Service Tax: Consulting Engineer Service: Revenue authorities had erroneously treated the know-how transfer agreement as a consulting engineering service. It is being pointed out that the impugned findings are contrary to decision of this Tribunal in the case of Pfizer Ltd. STO 2005 CESTAT 344.(Para 1,3).

Stay application allowed.

Stay: Port Services: The stevedoring activities were activities performed subsequent to unloading of cargo from vessel onto dock. Clearly these are activities ancillary to the main activity undertaken by the Port Trust and, therefore, prima facie, the licence issued by the Port Trust to the appellants should he held to be ore authorising "port services" taxable under Section 65 of the Finance Act, 1994. Prima facie case not made out.

Consulting Engineer Service: During the relevant period, levy fell only on Engineering Firms and not on other firms. The appellant being a steel manufacturing firm, cannot be treated as an "Engineering Firm"

Consulting Engineer Service: Transfer of technical information/technical know-how by the foreign company on payment of transfer fee does not come within the ambit of 'Consulting Engineer Services'.

Service Tax: Consulting engineer service: On perusal of the provisions in the agreement brings only the point that the agreement is for transfer of exclusive license, technical information and assistance for manufacture and sale of CNC Internal Grinding Machines of Polar model and its variants. There is no element of consultancy. In the result, no service tax was payable by the appellant. The amount paid during the period is, therefore, liable to be refunded. The impugned order is set aside(Para 5,6).

Appeal allowed.

Service Tax: Consulting Engineer services: Service tax with regard to design, drawing and know-how received by the assessee for manufacture of certain goods: Scope and liability: This very issue was subject-matter of the several appeals before this Tribunal, viz.

Bharat Electronics Ltd. & Ors v. CCE in Final Order Nos. 1061 to 1063/06 dated 15-6-2006

CCE v. Rubco Sales International (P) Ltd., STO 2005 CESTAT 170

Amco Batteries Ltd. v. CCE  = STO 2005 CESTAT 10

CCE v. Micro Finish Valves (P) Ltd., = STO 2005 CESTAT 128

Yamaha Motors (I) P Ltd. v. CCE, STO 2005 CESTAT 379

Samsung Electronics Co. Ltd. v. CCE, STO 2005 CESTAT 176

In the above noted judgments, it has been held that transfer of technical information/technical assistance/transfer of technical know-how, cannot be brought within the ambit of consulting engineer.(Para 3).

Appeal allowed.

Service Tax: Consulting Engineers: Test Inspection & Certification: Scope: During the period of dispute, the appellants had admittedly inspected their customers' machines and/or components thereof and certified them fit to be used by the latter. M/s. Bharat Heavy Electricals Ltd. (BHEL) and similar heavy industries were the customers of the appellants. As per the agreement between the appellants and M/s. BHEL the appellants were required to inspect machinery in three categories. In one category, the amount charged by them was exclusive of Service Tax, while, in the other two categories, it was inclusive of Service Tax. Though it was claimed that no Service Tax was ever charged in the relevant invoices, this claim is not supported by any evidence in the absence of the relevant invoices. It appears from the agreement that it was the function of the appellants' mechanical engineers to inspect their customers' machinery and to certify the same. In case the machinery required modification of design or other changes, the engineers would render the requisite advice. Prima facie, the nature of service rendered by the appellants to M/s. BHEL and others during the period of dispute would look like Consulting Engineers' Service.(Para 2).

Pre-deposit ordered.

Refund: the service receiver of the services provided by the non-resident was notified by the Central Government as liable to pay the Service Tax from 1-1-2005. This would indicate that prior to this date, a service receiver from the non-resident service provider was not liable to pay the service tax. If that be so, it is seen from records, that in this case the services were received by the appellant from the non-resident prior to the date of this notification. It is also settled law that the government cannot keep with itself the amount that is not due to it. Hence, the refund claim in this case can be entertained for processing.

Reimbursement of Expenses: Amount which is claimed as non-taxable by the applicant was in fact for the reimbursement of the expenses he Division Bench has held that, reimbursable/out of pocket expenses charges is not subject to service tax. Prima facie, case for complete waiver of pre-deposit of Service Tax.

Consulting Engineer Service: Levy during the relevant period is limited to professionally qualified Engineer or Engineering Firm and not to other firms which incidentally provided engineering consultancy.

Consulting Engineer: Service Tax Demand: In the absence of duty demand, penalty cannot be survived.

Stay: Activity undertaken is an activity of manufacture and not services. Stay application is allowed unconditionally.

Consulting Engineer Service: Service Tax is not to be levied on the royalty and technical services fee paid by the Indian Companies to their foreign counterparts for transfer of technical documents.

Consulting Engineer: Stay: From a perusal of the agreement between the parties, the view is that the relationship is one of licensor and licensee for the transfer of intellectual property rights. Even if a portion of the service has the character of consulting, quantification of that component is not available in the order.

Consulting Engineer Service: Transfer of technical know-how was not a taxable service during the period and in a plethora of decisions, this Bench has held there was no 'engineering consultancy' involved in such transfer.

Consulting Engineer: The agreement and the purchase order themselves make it clear and the clause as referred to clearly proves that they are rendering engineering services.

Consulting Engineer: Tribunal has already held that such payment of royalty on transfer of technology / information does not come within the heading of Consulting Engineer. Tribunal is surprised that the Commissioner has refused to follow the judgments, which settled the issue.

Consulting Engineer: The service under consideration is transfer of technology by the Korean Company to the appellants, which took place on 6-5-1997. The consideration (royalty) for that service was paid by the appellants on 5-9-2002. For determination of tax liability, the relevant date is the date on which the service was received by the appellants. Hence the relevant date in the present case is 6-5-1997. On that date, neither Consulting Engineer's Service nor transfer of Intellectual Property was a taxable service. Appeal allowed.

Service Tax: Scientific and Technical Consultancy Services: Scope and liability: the receipt of technical know-how services become liable for Service Tax only from 16-8-2002. In this case, the services rendered were for the period earlier to 16-8-2002. On this ground alone, the appeal is required to be allowed. Even otherwise, the appellants are not liable to pay Service Tax as they do not come within the category of 'Consulting Engineer' or Scientific and Technical Consultancy Services', as held in the case of CCE, Calicut v. Rubco Sales International P. Ltd. - STO 2005 CESTAT 170 wherein also it was clearly held that transferring technical know-how would not come within the ambit of consulting engineering services. Further in Para 4, reference was placed on the ruling of CCE, Palakkad v. Sun Metal & Alloys Ltd. [2006 (1) S.T.R. 291 (Tribunal)], BST Limited v. CCE, Cochin STO 2006 CESTAT 208, CCE, Cochin v. M/s. Kochi Refineries Ltd. & M/s. BPL Telecom (P) Ltd. STO 2006 CESTAT 292 , Jubilant Organosys Ltd. v.CCE, Meerut-II - STO 2006 CESTAT 52 (Para 4).

Appeal allowed.

Service Tax: Consulting engineering services: Scope and liability: The supply of technical know-how and royalty paid for technical know-how is not taxable as consulting engineering services. They referred to the decision of the CEGAT in the case of Bajaj Auto Ltd. v. CCE - STO 2004 CESTAT 11 and Pfizer Ltd. v. CCE - STO 2005 CESTAT 344 and Navinon Ltd v. CCE - STO 2004 CESTAT 87 wherein it has been held that recipient of technical know-how from foreign company against payment of royalty are not liable to service tax. Enhanced penalty set aside(Para 2,3).

Appeal disposed off.

Central Excise: Non inclusion of drawing, design and development charges in the assessable value: Since no prima facie case for total waiver of pre-deposit has been made out as regards the demand of excise duty and Rs. 3 lakhs has already been deposited, further pre-deposit towards the excise duty demand is ordered(Para 2).

Service Tax: Applicant is admittedly a manufacturer and, therefore, we are of the view that prima facie he is not liable to pay service tax and there was no requirement of pre-deposit(Para3).
 

Service Tax: Consulting Engineer Services: Scope & liability: Providing of technology for manufacture of goods is not taxable under the category of Consulting Engineer. The demand is for the period prior to 10-9-2004, cannot be taxed under the category of Consulting Engineer. Technical know-how is an intangible asset and does not amount to rendering of any services as held in the case of Transweigh (India) Ltd. v. CCE, Mumbai - STO 2004 CESTAT 129, (v) Essel Propack Ltd. v. CCE, Mumbai - STO 2005 CESTAT 48. (Para 4).
Appeal allowed.

Service Tax: Consulting engineer: Scope and liability: Services were rendered by it in India under the technical assistance agreement. The services were, in the engineering discipline as they related to the manufacture of motorcycles. In view of these facts, the interim order in another matter for a different period cannot be a binding precedent for making total waiver of deposit despite there being clear indication on record that services were rendered under the technical assistance agreement as stated in the statement prepared by the appellant. Therefore, even if the consideration received for "know-how", intellectual properly so called, as trade secret which is the value which was also included in the demand confirmed is kept on out of consideration, there still would remain the liability to pay service on the part of the appellant(Para 5).

Pre-deposit ordered.
 

Service Tax: Consulting engineer service: Scope and liability: By agreement dated 5-3-04, the appellant was granted a licence under the patents and know-how for manufacture of licensed products in India. In the definition clause, the term 'know-how' was defined to mean the essential technical information, skill and experience, including inventions, ideas and discoveries, that were owned, controlled or developed by the licensor and which were necessary for the manufacture and development of the licensed products and processes for such manufacture. The term 'patent rights' was also defined and the licensed products were described in Annexure I to the agreement. The licence was granted to enable the licensee to manufacture, assemble, use and sell licensed products and for that purpose to use the 'know-how', the inventions covered by the Patent Rights, the improvement of licensor communicated to licensee and any confidential information of Licensor communicated to licensee, which were collectively described as 'IP Rights' in clause 2.1 of agreement. Consideration for the licence and know-how was provided in clause 2.2. The royalty was also to be charged in respect of the licensed products, which were to be manufactured on the basis of this licence, over and above the fees prescribed for licence/know-how as provided in sub-clause (B) of clause 2.2 of the agreement.(Para 4). On going through the various clauses of the agreement appears that the Commissioner was justified in reaching the conclusion that the services rendered by the applicant were of consulting engineering. Partial pre-deposit ordered.(Para 6).

Interim stay granted.
 

Service Tax: Demand : Period of limitation: Appellants have a good case on limitation. They used to file their ST-3 returns periodically during the entire period and, therefore, the department is aware of the material facts. The show-cause notice was issued beyond the normal period of limitation. The provision for invoking the extended period of limitation was inserted in the Finance Act, 2004 on 10-09-2004. Even from that date, the department took more than one year to issue the show-cause notice and, that too, on the ground of suppression. Obviously, there was no suppression on the part of the appellants who admittedly filed their returns periodically.(Para 2).

Pre-deposit waived.
 

Consulting Engineer Service : Import of service : Issue covered by Tribunal’s own decision in Coen Company, hence, condition for pre deposit waived.

Consulting Engineer: In order to invoke longer period, there should be evidence of non-filing of ST3 Returns and suppression of facts. The appellants have produced ST3 returns, Annexures showing reimbursable amounts received and certificate of Chartered Accountant. Hence, larger period not invocable. Demand to be considered only for one year. Demanding service tax on gross amounts received is not sustainable, while imposing penalty one should exercise proper judgment. Otherwise such careless exercise of statutory powers would amount to mockery of judicial delivery system.

Valuation: Reimbursable expenses not subject to Service Tax: The DGST vide their clarification of October 2003 has stated that the reimbursable/out of pocket expenses charged is not subject to service tax and based on documents, the same can be excluded by the assessing officer.

Consulting Engineer: Mere supply of technology pertaining to design, engineering and technical specifications has no access with the activity of 'Consulting Engineer.

Service Tax: Consulting Engineer: Demand: Demands of Service Tax become sustainable only after 16-8-2002 when the provisions of Rule 6 was amended. Therefore, the Commissioner (Appeals) is justified in dropping the demands, as in the present cases, the amounts were all transferred prior to this date. This view has been confirmed by this Bench in the case of CCE v. Travancore Cochin Chemicals Ltd. - STO 2005 CESTAT 214 . Similar view has been expressed by the other Benches in the orders cited supra. Similar order has been passed by this Bench in the case of M/s. BST Ltd. v. CCE, Cochin [STO 2006 CESTAT 208  ] .(Para 6).
Revenue appeal rejected.

Service Tax: Consulting Engineer: Taxable value: The engineering designs and technical assistance so rendered by separate electrical engineers, prima facie, appellants cannot be called upon to pay Service Tax on this ground. With regard to the second element, the appellants had taken several pleas pertaining to the deductions which are available to them in terms of the invoice referred by the Commissioner. The same has not been dealt by the Commissioner, to that extent the order is not a speaking order. Therefore, the plea of the appellant that they are liable to pay Rs. 20,000/- is required to be accepted. There is interest element also which the appellants are liable.(Para 4).

Partial pre-deposit ordered.

Service Tax: Consulting Engineer: Scope and liability: The assessee was not carrying on the activity of 'Consulting Engineer' during the period 1997-98 to 2001-2002. The revenue proceeded to bring into the ambit of 'Consulting Engineer', the activity of erection, installation and commissioning. The Board Circular No. 79/9/2004-S.T., dated 13-5-2004 referred to by the Commissioner and the judgments in the case of CCE, Bangalore v. Air Stream Systems Pvt. Ltd. - STO 2005 CESTAT 6 Turbotech Precision Engg. P. Ltd. v. CCE, Bangalore - STO 2006 CESTAT 808 and Saurer India Pvt. Ltd. v. CCE - STO 2005 CESTAT 185 have clearly held that this activity cannot be brought into the ambit of 'Consulting Engineer'.(Para 4).

Revenue appeal rejected.

Service Tax: Transfer of technology and Consulting Engineer services: Demand: The appellants were only transferring the technology and were not rendering any consulting services in the field of engineering. Therefore, in terms of the noted judgments, the activity of transferring technology cannot be brought within the ambit of 'Consulting Engineer'. The ratio of the above judgments clearly apply to the facts of the case. The impugned order is not legal and proper and the same is set aside(Para 4).

Appeal allowed.

Consulting Engineer Service: The includability of the Supervision and Inspection Charges are not to be included in the category of 'Consulting Engineers'. They are collecting fee for giving training to the employees of the purchasers, which does not come within the ambit of 'Consulting Engineer' Services.

C&F Agent: Receipt of Service : As the SCN issued after amendment in the Act, the same is not sustainable.

Consulting Engineer Service: The turn-key project contract entered into by the respondent is "divisible", hence, liable to service tax.

Service Tax: Consultant engineer: Demand: The appellant has been raising bills and charging from their customers for offering technical consultancy and also technical services rendered by them during the relevant period. It is contradictory to the statement made before us today that they were not providing the services as "consultant engineer".(Para 3).

Pre-deposit ordered.
 

Consulting Engineer Service: As an agent of the foreign company, service is provided by appellants as sub-contractor only to the prime consultant who is, IRCON. In these circumstances, the liability to pay Service Tax to the Government is on the prime consultant, who is IRCON and not on the sub-consultant, who is the appellant.

Service Tax: Payment of royalty towards technical assistance and licence agreement, whether amounts to rendering of consulting engineer service: Scope and liability : For the relevant period, such payments were not coming within the category of consulting engineer and were not leviable to service tax in terms of the judgments in the case of (i) Navinon Ltd. v. CCE, Mumbai-VI STO 2004 CESTAT 87 (ii) Bajaj Auto Ltd. v. Commissioner of Central Excise & Customs, Aurangabad STO 2004 CESTAT 11 (iii) Araco Corporation v. CCE, Bangalore STO 2004 CESTAT 6.(Para 3).

Stay application allowed by granting waiver of pre-deposit.

Service Tax: Consulting engineering services: Scope and liability: The assessee has not carried out any activity of providing consulting engineering services to bring under the service tax net. The appellants were carrying out ECO conservation works to preserve the wasteland and bringing them into use, especially for the development of tribals. The said activity cannot be considered as activity coming within the ambit of consulting engineering services. Therefore the findings recorded by the Commissioner is legal and proper.(Para 2).
Revenue appeal rejected.

Refund: Scientific or Technical Consultancy Services are covered under the service tax with effect from 16-7-2001. The tax paid prior to that period is refundable.

Consulting Engineer: Sub Contractor: the sub-contractor/sub-consultant is not required to discharge Service tax as the main consultant discharged the same. The appellants have placed evidence but the original authority has noted that the same has not been produced. The matter remanded for de novo consideration on limited issues.

Service Tax: Management Consultant: Scope and liability: Powers of review under Section 84: Power of Review under Section 84 exercised by the Commissioner is entirely without jurisdiction and without authority of law as the Review proceedings are clearly contrary to the orders of the Tribunal holding that the appellant rendered the services as Consulting Engineer. It was urged that the order of the Assistant Commissioner of Central Excise purported to be reviewed by the impugned order of the Commissioner of Service Tax was no longer in existence on the date of passing of the impugned order. In other words, the order of the Assistant Commissioner of Central Excise merged with the order of the Tribunal. Hence, the impugned order has effectively reviewed the order of the Tribunal and not of the Assistant Commissioner of Central Excise. The Commissioner of Central Excise has no power to review the order of the Tribunal under Section 84 of the Act. Impugned order is set aside(Para 4,6).

Appeal allowed.

Service Tax: Consulting Engineers service: Scope and liability: The order passed by the Additional Commissioner is after due examination of the agreement and supplementary agreement. He has clearly concluded that technology transfer fee paid for services rendered in Malaysia, the same is not attracted within the ambit of service tax. The order passed by the Additional Commissioner is correct in law. The findings given by the Commissioner in the Review Order is not correct in the light of the below noted judgments where the issue is no longer res integra and has been decided in the following judgments:-(i) Navinon Ltd. v. CC [STO 2004 CESTAT 87] (ii) Pfizer Ltd. v. CCE [ 2005 (188) E.L.T. 456 (Tri.-Mumbai) = STO 2005 CESTAT 344] (iii) Same Engines India Pvt. Ltd. v. CCE [STO 2005 CESTAT 344] (iv) Turbo Energy Ltd. [STO 2005 CESTAT 373] (v) CCE v. Reichie De Massari Ag Switzerland [ STO 2005 CESTAT 285] (Para 3).

Appeal allowed.

Service Tax: Commercial Training and Coaching Services: Scope and liability: The activity of training to persons to utilise complicated and sophisticated machine system cannot be considered as "Consulting Engineer" services as contended by the Commissioner of Service Tax. They were not undertaking any activity of advice, consultancy or technical assistance in any field of the engineering. They have relied on the following Tribunal rulings - (a) Chennai Telephone v. CCE STO 2003 CESTAT 7, (b) CCE v. MRF Ltd. STO 2004 CESTAT 75, (c) Yokagawa Bluestar Ltd. v. CCE [2004 (177) E.L.T. 400 (Tribunal) = STO 2004 CESTAT 136, (d) Spic SMO Ltd. v. CCE STO 2005 CESTAT 361, (e) Amet Ltd. v. CCE [2006 (1) S.T.R 284 (T)] wherein this aspect of the matter had been dealt with and the Tribunal held that this activity could not bring into within the category of "Consulting Engineer" services. The ratio of the cited judgments clearly applies to the facts of the present case.(Para 2).

Appeal allowed.

Consulting Engineering Service: The service receiver is the authorised person to meet the service tax liability. Even after the amendment of the rule with effect from 16-8-2002 agreement still holds good and the service receiver has taken up the responsibility of meeting the service tax liability. The mere fact that the service provider has provided with an office in the building owned by the service receiver it cannot be treated as an office or registered office of a foreign company. No materials have been produced to show that the service provider has got an independent registered office in India. Going by the agreement entered into between the service provider and service receiver and also the reply made by the Board, it is evident that service tax liability is to be borne by the service receiver and not on the service provider. The service receiver has already met the service tax liability.

Service Tax: Consulting Engineer's Service: Scope and liability: Appellant had only transferred technical know-how for manufacture of certain products for a price. It was only a transfer of asset lor which they received compensation and they did not render any service to M/s. RIL. It is argued that in view of the decision of the Tribunal in Navinon Ltd. v. CCE reported in STO 2004 CESTAT 87 know-how transfer is not subject to Service Tax under the category of "Consulting Engineer's Service" and, therefore, sought to set aside the impugned order.(Para 2,3).

Stay allowed, pre-deposit waived.

Service Tax: Consulting Engineer Services: Demand: Know how and technical information in regard to all models, including the ones developed for Indian conditions, is owned by Honda. Production in India of those models is in accordance with the license granted. Thus, it is not a case where an Indian company has developed any model in (engineering) consultation with a foreign company. This case does not involve engineering consultancy which attracts levy of service tax. (Para 4,6).

Pre-deposit waived.
 

Service Tax: Consulting engineer: Scope and liability: Appellant is an engineering company, within the definition of an "engineering firm" under the statute. The service rendered is in the nature of assistance by way of supplying drawing, design etc. prepared by the engineering division of the appellant. This division is mainly of qualified Engineers like draughtsmen etc. Thus, the assistance would come in the category of engineering consultancy. Since the appellant satisfied the definition of 'consulting engineer' as an engineering firm under the statute and the service rendered is consulting engineers service, the tax demand is clearly within the ambit of law(Para 3).

Appeal disposed off.

Consulting Engineer: Engineering firms are a separate category altogether from general industrial organizations. They derive their separate and particular identity from the specialized engineering knowledge flowing from the employment of engineers and the normal work undertaken by them. In the present case, the consultancy receipt of the appellant is a stray receipt. The appellant's identity is as a sugar manufacturer and not as an engineering firm.

Service Tax: Refund of duty paid by mistake: Liability to pay service tax on the services provided a non-resident or a resident from outside India falls on the person who receives the taxable services, if the foreign service provider does not have any office in India. From the correspondence, it is very clear that the foreign service provider had an office in India situated at Chennai. The department was in correspondence with such office in Chennai from September, 2004. The department having received the service tax payment from the respondent, rightly or wrongly, hence did not issue any show cause notice to the service provider for liability to pay service tax. Commissioner (Appeals) has correctly appreciated the provisions of Rule 2(l)(d)(iv) and the revenue has failed to explain the reasons for not issuing show cause notice to service provider, and revenue cannot hold on to the amount paid by the respondent by mistake.(Para 6,7).

Revenue appeal dismissed.

Demand: Limitation: Consulting Engineer Service: The service tax is not liable to be paid as the assessee has not received the payments towards the value of taxable service. The appellants have been filing returns and informing the department about the non-receipt of the value of services rendered by their customers and about the non-payment of the same. Department aware about the activities of appellants, hence, the issue of show cause notice beyond the period of one year is barred by time.

Service Tax: Consulting engineers service: Royalty received against transfer of technical know-how to an Indian customer : Demand : This Tribunal has consistently held that 'consulting engineer's service' is not involved in the transfer of technical know-how from a foreign party to their Indian customer vide Navinon Ltd. v. CCE - STO 2004 CESTAT 87 Yamaha Motors (I) Pvt. Ltd. v. CCE - = STO 2005 CESTAT 379 etc. It also appears from the records that, from 10-9-2004, M/s. L.G. Balakrishnan & Bros., Coimbatore are paying service tax on the royalty paid by them to the appellants, as a tax on 'intellectual property service'. These payments are being accepted by the Department without demur. The appellants have established prima facie case.(Para 2).

Pre-deposit waived.

Service Tax: Consulting Engineer: Scope and liability: The present appeal deals with the contracts entered by the appellant with their clients. The first contract has been entered with the Naval Science & Technology Lab, Government of India, Ministry of Defence, Vizag. This contract is for "Design, development and supply of turbo power pack and spares" and billing was done part by part at various stages. It is very clear that the contract is for the supply of Turbo Power Pack and Spares. It is actually a works contract consisting of number of activities. The contention of the appellant that these activities would not come within the purview of the category of Consulting Engineer services has great force. On the goods cleared, excise duty is separately paid. In view of the decided case-laws (a) Daelim Industrial Co. Ltd. v. CCE, Vadodara - STO 2003 CESTAT 9 (b) CCE v. Daelim Industrial Co. Ltd. - STO 2003 SC 98 (c) Larson & Tourbo Limited v. CCE, Cochin - STO 2003 CESTAT 30, the works contract cannot be vivisected to levy Service Tax on different activities. Similar is the case in respect of the contracts entered with other clients. During the relevant period, the activities undertaken by the appellant under the contracts in the impugned order are not liable to Service Tax under the category of 'Consulting Engineers'.(Para 6).
Appeal allowed.

Service Tax: Consulting engineering: Penalty: The respondents deposited the entire amount of Service Tax and the interest thereon, before the issuance of show cause notice. The Government of India in September, 2004 came out with the amnesty scheme for waiver of penal proceedings against those assessee who have not got themselves registered with the authorities, provided they got registered within the specific period and discharge the Service Tax liability and interest thereof. This case is squarely covered in that amnesty scheme. The Tribunal in the case of Commissioner of Custom Excise, Bhopal v. Bharat Security Services & Worker's Cont. reported in 2005 (188) E.L.T. 454 (Tri. - Del.) had held as :-"I find that the service provider who registered and paid service tax during Extra Ordinary Tax Payer Friendly Scheme up to 30-10-2004, not liable to any penalty. Therefore, there is no infirmity in the finding of the Commissioner (Appeals) that the respondents are also not liable for penalty.(Para 5,7).

Revenue appeal dismissed.

Service Tax: Consulting Engineer on payment of royalty: Scope and liability: A strong prima facie case for total waiver has been made out in the light of Tribunal's order in the case of Navinon Ltd. v. Commissioner of Central Excise, Mumbai [STO 2004 CESTAT 87] which has been followed in the case of Araco Corporation v. Commissioner of Central Excise, Bangalore [STO 2004 CESTAT 6] and Bajaj Auto Ltd. v. Commissioner of Central Excise & Customs, Aurangabad [STO 2004 CESTAT 11].(Para 2).
Pre-deposit waived, stay allowed.

Consulting Engineer Service: The appellant is not a firm or a company but is a society registered under the Societies Act. In terms of Section 65(13) the services of 'consulting engineer' has been defined to mean 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 in order to satisfy this definition. The services have to be rendered by an engineering firm.

Service Tax: Consulting engineer: Scope: Asst. Commissioner in Order-in-Original after due consideration of all the facts clearly noted that the appellants were not carrying on any activity in the nature of 'Consulting Engineer', but it was merely a coaching or providing tuition given by the appellants to their customers for correct usage of the technology. Their services were commercial training or coaching services which come into taxable limit only by Finance Act, 2003 w.e.f 1-7-2003. He also relies on the Board's Circular dated 2-7-1997 which explained as to what services would fall within the 'Consulting Engineer' services. He relies on the following rulings, wherein this issue has been decided in the assessee's favour.:- (i) Chennai Telephone v. CCE - STO 2003 CESTAT 7, (ii) CCE v. MRF Ltd. - STO 2004 CESTAT 75, (iii) Yokagawa Bluestar Ltd. v. CCE - 2004 (177) ECC 400, (iv) Spic-SMO Ltd. v. CCE - STO 2005 CESTAT 361, (v) Amet Ltd. v. CCE - STO 2005 CESTAT 11. However, the Commissioner has reviewed the matter and has given his own reasons to include the services under the caption 'Consulting Engineer', which is seriously challenged in the light of the Board's Circular and the rulings of the Tribunal including this Bench in respect of similar activities. On a prima facie consideration, the reasons given by the Asst. Commissioner in Order-in-Original are justified, which is in light of the Board's circular and the citations relied.(Para 4).

Pre-deposit waived, stay allowed.

Service Tax: Consulting engineer's services: Royalty payment: Scope: Tribunal in the case of Commissioner of Central Excise, Madurai v. Reichie De Massari AG Switzerland [STO 2005 CESTAT 285] and Bajaj Auto Ltd. v. Commissioner of Central Excise & Customs, Aurangabad [STO 2004 CESTAT 11 ], which have held that royalty payments for transfer of technology are not leviable to service tax as the transfer of technology is not a taxable service.(Para 2).
Pre-deposit waived, stay allowed.

Service Tax: Consulting Engineer: Scope and liability: On examination of the MOU entered into by the appellant with the said organization, the appellants are not rendering any services in the nature of "Consulting Engineer". The appellants and the ER and DCI are jointly carrying on the activity of imparting training and providing course materials to their students at STDC on the terms that the faculties of such training shall be provided by the appellants and the appellants and the ER & DCI will share the fees received from the students in the ratio of 50 : 50. In a circumstance like this, the appellant's services are known in the nature of imparting training. The activity carried on by the appellant cannot be considered to fall within the category of Consulting Engineer, as the appellants are providing training and coaching services and sharing the fees. They are not working in the advisory capacity or as a service provider. Therefore, the confirmation of service tax on the appellant is not justified(Para 4).

Appeal allowed.
 

Consulting Engineer: Services received in India would not be liable for payment of Service tax, during the relevant period in the category of the 'consulting engineers'.

Service Tax: Penalties u/s 76,77: Where service tax was deposited with interest thereon before the issuance of show cause notice any penalty under Sections 76 & 77 of the Finance Act, 1994 is not mandatory. In this connection, reliance is placed on the Tribunal's decision in Commissioner v. Malancha Photographer - STO 2005 CESTAT 121 (Para 2).
Pre-deposit waived and stay allowed.

Service Tax: Supply of technical know how: Scope and liability: The supply of technical know how and royalty paid for technical know how is not taxable as consulting engineering services. They referred to the decision of the CEGAT in case of Bajaj Auto Ltd. v. Commissioner of C. Ex. STO 2004 CESTAT 11 Pfizer Ltd. v. Commissioner of Central Excise STO 2005 CESTAT 344 and Navinon Ltd. v. Commissioner of Central Excise STO 2004 CESTAT 87 wherein it has been held that recipient of technical know how from foreign company against payment of royalty are not liable to service tax(Para 3).

Pre-deposit waived, stay granted.
 

Service Tax: Consulting Engineer's Service: Scope and liability: The relevant show-cause notice did not claim that, from 01-07-2003 the assessee was availing "Scientific or Technical Consultancy" from their foreign collaborator but maintained that the assessee was availing "Consulting Engineer's Service" throughout the period of dispute. It has been consistently held by this Tribunal that providing technical know-how is not to be equated with providing Consulting Engineer's Service. The assessee has prima facie case against the demand of Service Tax and against the penalty.(Para 4).

Appeal allowed by way of remand.
 

Consulting Engineer: Transfer of technical know how and technology does not mean the services liable to taxes.

Consulting Engineer Service: The transfer of technology was not the service liable to taxes.

Service Tax: Consulting Engineer: Waiver of pre-deposit: The transactions involving exchange of technical know-how, which also included training of personnel in the manufacture of machines for which the appellant held the patent did not constitute provision of consulting engineer's service. In a large number of cases including the Larger Bench decision in Yamaha Motors (I) Pvt. Ltd. v. Commissioner of Central Excise, Delhi-IV (Faridabad) STO 2005 CESTAT 379 the Tribunal held that instruction of personnel and training also formed part of transfer of know-how and also that the transfer of technical know-how constitutes transfer of asset and not provision of any service. It has been decided that consideration for the technical know-how was collected as royalty and that the royalty was not subject to Service Tax. The appellants have made out a prima facie case.(Para 5).
Pre-deposit waived.
 

Service Tax: Technical know-how service: Scope and liability: Under Article 3.1 of the agreement the amount of Rs. 1.50 crores is consideration both for technology transfer and the engineering services provided for setting up the project. This position is also clear from Article 2.1 where it has been made clear that AOL primarily assisted ABL in setting up gramdoot project. The services of consulting engineer are required for setting up the project.(Para 4).

Pre-deposit ordered.

Service Tax: Consulting engineer's service: Scope and liability: The lower authorities have found that the assessee was authorized by the foreign collaborator to pay service tax. This finding is not sustainable inasmuch as, in the relevant agreement, the authorization was specifically to pay income tax. The authorities below have extended the scope of this provision of the agreement in an unwarranted manner. Further, the assessee is also entitled to the benefit of the Tribunal's decision in Navinon Ltd. v. Commissioner - 2004 (172) E.L.T. 400 (Tri. - Mumbai) = STO 2004 CESTAT 87 to the effect that the transfer of technical know how does not involve the consulting engineer's service. Tribunal's decision in Navinon's case has been affirmed by the Apex Court. (Para 2).

Pre-deposit waived, stay allowed.

Service Tax: Consulting engineers: Scope and liability: These services were made taxable by virtue of insertion of clause (g) of sub-section (105) of Section 65 with effect from 7-7-97 by Notification No. 23/97, dated 2-7-97. Therefore, no service tax could have been recovered on services rendered prior to 7-7-1997(Para 2).

Appeal allowed.

Service Tax: Penalty u/s 76: Tribunal in the case of CCE Vs. Top Detective & Security Pvt. Ltd. reported in STO 2004 CESTAT 128 HELD : "Service Tax - Delay in filing of returns - Penalty - Service Tax and part of interest accrued paid even before adjudication of case - Penalty under Section 76 and 77 of the Finance Act, 1994 not mandatory for late filing of returns - Plea of appellant that late receipt of payment from customers resulted in delayed payment of service tax, taken into consideration and penalty set aside by Commissioner (Appeals) - Order of Commissioner (Appeals) proper."This Tribunal in the case of CCE, Kolkata v. Eastern Security Concern reported in 2005 (3) STJ 714 (CESTAT-KOL), has relied upon the decision of Top Detective & Security Services Pvt. Ltd.(Para 3).

Appeal allowed.
 

Service Tax: Consulting Engineer's Service: Reimbursement expenses: Demand: Appellants are resisting the present demand on the ground that some amount represents "reimbursable expenses" as per the agreement between them and the foreign company. They have not adduced any evidence of the said amount having been reimbursed by the foreign company, nor is there any evidence available on record to indicate that the said expenses were incurred on behalf of the foreign company.(Para 1).

Pre-deposit ordered.
 

Service Tax: Consulting Engineers' Service: Pre-deposit: The appellants were receiving taxable services from abroad as well as within the country. All those services were prima facieinput services. Nothing other than a service provided by the appellants can be considered to be "output service". In this case, no reference has been made to any such service. It is on this fact ruled out prima facie case.(Para 3,4).

Pre-deposit ordered.

Service Tax: C & F services: The applicants were treated as Clearing and Forwarding Agent and the demand was confirmed after following the decision of the Tribunal in the case of Prabhat Zarda Factory (India) Ltd. v. CCE reported in STO 2002 CESTAT 22 . However, the matter has been referred to the Larger Bench to re-consider the decision in the case of Prabhat Zarda.(Para 2).

Consulting engineer: Scope: The applicant only fabricated certain parts of the finished goods of another manufacturer. In these circumstances, it cannot be held that the applicant has provided any service as consultancy Engineer(Para 2).

Real Estate Agent: Scope: They had received commissionfrom their customer for arranging land. Since applicant received as commission in respect of the deal of sale of land. Pre-deposit ordered.(Para 3)
Pre-deposit ordered.

Consulting Engineer: The principal object of the contract is that of construction and not of rendering any service and accordingly service tax cannot be levied on service portion of the contract.

Service Tax: Consulting Engineers: Waiver of pre-deposit and stay: Service tax is not leviable on technical know-how, cannot be prima facie accepted in toto for the reason that although ground for waiver of service tax on royalty exists since technical assistance has also been provided as seen from the agreement between the applicant and M/s. Guala Closures (India) Ltd. tax would be leviable on technical assistance rendered by the foreign company to the company in India.(Para 2b).

Pre-deposit ordered.

Service Tax: Consulting Engineering: Scope and taxability: Appellants are not pleading financial hardship and hence they should deposit the amount. Although the appellants have a strong prima facie case, they have not pleaded financial hardship. The aspect of the services rendered is required to be considered at the final stage.(Para 3).

Partial pre-deposit ordered.

Service Tax: Consulting Engineer's Service: Scope: This issue is already covered against the Revenue by decisions of the Tribunal vide Navinon Ltd. v. Commissioner STO 2004 CESTAT 87 The appellants have made out prima facie case (Para 1).

Pre-deposit waived and stay allowed.
 

Consulting Engineer Service: The appellants only supplied the technology pertaining to design, engineering and technical specifications of Hot Water Generation System. No direct service pertaining to consulting engineering services provided by them in terms of the definition appearing in the Finance Act under this category.

Foreign service provider: The show cause notice dated 31-7-2002 issued through the Indian Embassy on 10-10-2002 without jurisdiction in as much as Rule 6(1) of the Service Tax Rules has been deleted from 16-8-2002. The show cause notice having been served on 10-10-2002 hence the same is not sustainable.

Service Tax: Consulting Engineer Services: Waiver of pre-deposit: It is not a case only of transfer of technical know-how but that the applicants are connected with the engineering discipline and entered into the agreement between them and M/s. Sandvik Sicoma, France and M/s. Driltech Mission U.S.A for technical assistance to the applicants which is necessary for them to manufacture their product and therefore covered under the Consulting Engineer Services. The agreements are not before us and therefore going by the finding of the adjudicating authority no prima facie case for total waiver can be said to have been made out by the applicant(Para 3).

Pre-deposit ordered.

Service Tax: Consulting Engineers under Section 65 (105) (zzq) : Waiver of pre-deposit: The appellants are not said to be carrying out the activity of Consulting Engineers but are conducting economic and financial analysis, social and environmental screening, etc. It is the submission that these activities do not cover in terms of provisions of the service tax. There is a force in the submissions.(Para 3).

Stay application allowed and pre-deposit waived.

Service Tax: Consulting Engineers: Scope and liability: Lower Appellate Authority relied upon the judgment of the Hon'ble Madras High Court in the case of V. Shanmughavel v. CCE, Chennai STO 2001 Mad 217 in which the High Court held that valuers of plant & machinery being professionally qualified engineers have to be regarded as Consulting Engineers and services rendered by them to be considered as Taxable service. The applicants herein provided services of surveyor, loss adjusters and are valuers and therefore, the applicants are liable to pay tax as Consulting Engineers and also liable to penalty.(Para 2).

Pre-deposit ordered.

Consulting Engineer: Appellant provides service in relation to commissioning, installation and erection of gas plant and equipment etc. The CBEC has clarified that the charges for erection, installation and commissioning will not be covered under the category of Consulting Engineer Services during the period in dispute viz. July, 1997 to October, 2001.

Central Excise: Valuation: Addition of Design and Engineering/Technical feasibility charges for furnaces manufactured and cleared: Commissioner (Appeals) has already given relief to the extent as the charges is nothing to do with the manufactured items. On the very issue, the Commissioner of Central Excise, Mumbai has demanded service tax for the services provided in the capacity as Consulting/Engineering services. Commissioners cannot issue two contradictory orders for the same service as held by the Apex Court judgment in the case of O.R.G. Systems v. Collector of Central Excise, Vadodara STO 1998 SC 50. As substantial amount has already been deposited, therefore the waiver of balance amount of duty and penalty can be granted.(Para 1,3)

Pre-deposit waived.

Service Tax: Consulting enginers: Scope: Transfer of technology does not come under the category of consulting engineers as per Tribunal ruling rendered in the case of CCE, Calicut/Cochin v. M/s Rubco Sales International Pvt. Ltd. and M/s Sun Metal & Alloys (P) Ltd. [Final Order No. 1888 & 1889/2005., dated 11-11-2005] STO 2005 CESTAT 170. Appellants have not posted their engineers for consultation purpose in the engineering field with M/s JPOCL. They have only transferred the technical know-how service. The ratio of the citation referred to by the learned Counsel clearly applies to the facts of the case.(Para 1,2,3).

Pre-deposit waived.

Service Tax: Consulting Engineering: Scope and taxable nature: It is clear that in the present case the assessee cannot be said to have rendered any service which could be categorized under the service as a Consulting Engineer. The assessee has only permitted the use of their trademark by other parties and while doing so, they have provided technical know-how which cannot be equated to a service rendered by the Consulting Engineer or by a Consulting Engineering Firm. Relevant case laws- Bajaj Auto Ltd. v. Commissioner of Central Excise & Customs, Aurangabad, reported in STO 2004 CESTAT 11 ("Royalty for right to use trademark is a transaction in property and no consultancy or advice is involved and the same is not liable to service tax"). Yamaha Motors (I) Pvt. Ltd. v. Commissioner of Central Excise, Delhi-IV (Faridabad) - STO 2005 CESTAT 379 ("Value of incidental advice, if any, cannot be cut out and subjected to service tax"). (Para 7).

Appeal allowed.

Consulting Engineer Service: The contract entered by the respondent is a comprehensive contract and it was only for the convenience sake the respondent raised the bills on their client separately for design, engineering, erection and labour charges. The respondent is an engineering firm engaged in the manufacture of engineering goods as well as execution of contracts for various engineering works for their clients.

Penalty: The Apex Court has laid down the law that even than the mandatory penalty of 100% prescribed yet same need not be upheld and there should be a finding by the assessing officer as to why the penalty levels have been kept at the mandatory levels.

Service Tax: Consulting Engineering Services: Refund: The appellant had made the payment of the amount which was payable as service tax in respect of the services provided by the foreign party NKK Corporation and it was earmarked for deposit in the invoice issued by the NKK Corporation on 2-10-2002, a copy of which is on record. As per that invoice which was sent to the appellant as per the agreement for technical assistance for rail and universal rail beam mill at Raigarh Works (Stage 1) dated April 10, 2001, the service tax "for deposit" to the tune of 2,631,750 Yens was clearly added. This amount in Yen as calculated by both sides tallies with the amount of service tax paid by the appellant. This amount which was added in the invoice as service tax in respect of technical assistance rendered by the service provider was the liability of the service provider and, therefore, it was sought to be collected under the invoice by adding it to the total amount payable by the appellant. However, this amount was actually paid by the appellant instead of sending it to the foreign service provider in view of the specific stipulations reached between them in the agreement for technical assistance.(Para 10).

Appeal dismissed.

Service Tax: Consulting Engineer: Refund: Admissibility: The appellants filed a refund claim for the Service Tax paid by them under mistaken provisions of law, on the ground that Service Tax is not payable when there is a lump sum contract, for which they relied upon the decision of the Tribunal in the case of Daelim Industrial Co. Ltd v CCE, Vadodara - STO 2003 CESTAT 9. If the appellants are able to produce evidence that they have not passed on the incidence of Service Tax to their clients, then they are eligible for Refund. (Para 2,5,7).

Appeals allowed.

Service Tax: Consulting Engineer: Scope and taxability: Appellants debit note dated 23-10-02 gives the particulars as "Being service charges to attend to your 28 Nos. Weaving Machines as per your Order No. C/12201168, dated 5-9-02." In their Purchase Order they indicate their services as "Looms servicing." From this, it is clear that prima facie they impart certain services which can be reasonably interpreted as "technical assistance" as these services appear to be technical in nature. However, appellants is confident of producing adequate material to show that what they render cannot come under the category "technical assistance" as per the definition of the term "consulting engineer".(Para 4,5).

Pre-deposit ordered.

Service Tax: Technical know-how fees and royalty: Taxability: Commissioner (Appeals) set aside the order-in-original on the ground that the period of dispute is prior to 28-2-99 when Service Tax rule was amended to provide that in the case of a person who is non-resident or is outside from India and does not have any office in India, the Service tax thereon during the relevant period was payable only by the service provider who was liable to pay service tax and not any person authorized by him or the service receiver.(Para 2).

Revenue appeal rejected.

Consulting Engineer Service: Works Contract: As the appellants have been able to demonstrate that theirs is a turnkey contract. Work contract is not liable to Service Tax under consulting engineer services.

Service Tax: Consulting engineers service: Scope and taxability: The appellant are admitting that they are also providing the consultancy in respect of design etc. In addition to this, they are also testing the materials to find out physical property which does not amount to consultancy. The demand is confirmed after taking into consideration the consolidated entry regarding income from technical consultancy engineering service. The appellant produced the evidence by way of producing the request letter from various institutes and organization which shows that the material was sent only for testing and also produced the bills for testing. In these circumstances, it is a fit case for re-consideration by adjudicating authority.(Para 6).

Appeal allowed by way of remand.

Service Tax: Consulting engineers: Scope and taxability: Commissioner has clarified the issue in the light of the Board's Circular and therefore it cannot be said that the appellants are merely procuring and selling the drawing and designs. They had also given advice and consultation. In the light of the admitted facts, the appellants should pre-deposit the service tax amount.(Para 3).

Pre-deposit ordered.

Service Tax: Recipient of Consulting Engineers service: The grounds taken by the appellants is correct. Since this Tribunal in the Final Order No. 399/2005-NB(A), dated 16-3-2005 have held that the appellants i.e recipient of service, are not liable to pay service tax, therefore, it becomes immaterial whether the service received by them falls under the category of Consulting Engineers or not.(Para 3).

Appeal allowed.
 

Service Tax: Consulting engineer services: Demand: There is no binding on the service recipient to act on behalf of his foreign service provider unless authorised by the latter. Though the Commissioner (Appeals) has held that certain clauses in the agreement can be treated as an authorization and thereby burdening the appellant on the tax liability of his service provider, there is no eye to eye with such an interpretation. No explicit direction or authorization for payment of service tax strictly in terms of the proviso (2) to Rule 6 of Service Tax Rules on behalf of the service provider is forthcoming in the said agreement. In other words, the agreement, as contended by the appellants, would not relate to those taxes that would be applicable on account of changes in tax laws.(Para 7).

Appeal partially allowed.

Demand Set Aside: The assessee could have deducted only income tax and no other tax unless they are authorised by the provider of the services to pay the tax on their behalf. There was no authorisation by the provider of service to appellant to pay service tax on their behalf. Appeal of the Revenue is rejected.

Waiver of Pre-deposit: The orders passed by the lower authorities do not contain any material indicating the nature of the "service" provider or of the "service" provided. Appellants have made out a strong prima facie case.

Consulting Engineer's Service: Stay: Consulting Engineer's Service did not take within its scope any such intangible service as transfer of technology. The assessee has a prima facie case. Waiver of pre-deposit and stay of recovery granted.

Consulting Engineer Service: Royalty charged cannot be taken as a consideration for the service. It is rather a fee between the two contracting parties to be paid for sharing mutual benefits / profits.

Service Tax: Waiver of pre-deposit: Services were rendered outside India in Russia and hence no tax liability arises. As the services have not been provided in India, applicability of Service Tax does not arise.(Para 1,2).

Pre-deposit waived.
 

Consulting Engineer: Any royalty or other consideration for technical know-how received by an assessee in India from a foreign company was not taxable under the Finance Act, 1994.

Service Tax: Consulting Engineers: Demand: "Consulting engineer" means 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: and further the services provided by such Consulting Engineer are covered under the statutory provisions are: "(g) 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 [but not in the discipline of computer hardware engineering or computer software engineering]". Thus services provided by a Consulting Engineer to a client will get covered under the category and is liable for service tax.(Para 6).

Appeal dismissed.
 

Consulting Engineering Service : the assessee is engaged in the manufacture of ferro silicon. They were only carrying on the activity of in-house development of technology which were sold to M/s. Indsil Electrosmelt Ltd., which is the assessee's own sister concern.

Consulting Engineer : The appellants have not carried out any activity of service to be attracted within the category of Consulting Engineers. They have merely transferred their know-how which cannot be brought within the ambit of Consulting Engineering services.

Service Tax: Consulting Engineering services: in case of SPIC-SMO Ltd., v. CCE, Chennai STO 2005 CESTAT 361 wherein it is held that the activity of selecting technical manpower does not come within the ambit of consultancy engineering services.(Para 1,2).

Stay application top quality swiss replica watches allowed.

Service Tax: Engineering consultancy: As per Circular 79/9/04-S.T., dated 13-5-2004 issued by the Ministry clarifying that the charges for erection, installation and commissioning are not covered under the category of consulting engineer services. Therefore, in view of this clarification, the order passed by the Commissioner (Appeals) is just proper and legal.(Para 3).

Revenue appeal dismissed.

Consulting Engineer Service: Technical Know How: There is no evidence of any technical know-how having been transferred by the appellants to the other company, nor of receipt of any payment by the appellants. Waiver of pre-deposit and stay of recovery in respect of tax and penalties granted.

Consulting Engineer Service: Technical know-how fee or royalty was not taxable for the period August, 2002 to March, 2004. Appellants do have a strong prima facie case waiver of pre-deposit and stay of recovery granted.

Consulting Engineer Service: Besides giving licence to use the know-how, there was stipulation to provide active engineering services consultation and advice as well as technical assistance.

Show Cause Notice: The show cause notice was issued since the assessee had not filed the returns and it covered the period in which the agreement was made. There was no question of re-opening any previous assessment since admitted by the returns were never filed.

Assessment: No analogy can be drawn from notices of assessment issued under the Income Tax laws which contains detailed provisions in the context of issuance of such notices for assessment of income of the relevant previous year.

Demand Set Aside: Period of dispute is clearly prior to amendment of Service Tax Rules, 1994. Since only through this amendment, liability to pay tax was fastened unto a service recipient and the said amendment is prospective, the appellant cannot be made to pay any Service Tax.

Consulting Engineer Service: There is no finding that the services of a qualified engineer or any engineering firm having a qualified engineer were provided under this agreement. Pre-deposit of the amount payable waived.

Interpretation: Agreement provided that all questions arising out of under this agreement shall be governed and interpreted in accordance with the laws of Republic of India This article too cannot be said to have placed a burden on the appellants to pay service tax, which primarily is a burden on the service provider.

Consulting Engineer Vs Software Engineer: Scope of consulting engineers is not limited only to the traditional branches of engineering such as mechanical, electrical and civil.

Consulting Engineer: To be a consulting engineer, one has to be professionally qualified by obtaining a degree of engineering or a diploma of engineering from a recognized university.

Consulting Engineer: Clearly held that the contractor who receives only lumpsum payment for carrying out the contract work in terms of the turnkey project and further in terms of drawing / documents prepared by the consulting engineers and reviewed by them, cannot be considered as "consulting engineers". Appeal Allowed.

Service Tax: Consulting Engineers: Waiver of Pre-Deposit: Prima facie, a strong case has been made out in the light of Tribunal's decision in the case of M/s. Navinon Limited v. CCE, STO 2004 CESTAT 87 holding that the transfer of technical know-how involved is transfer of intellectual property during the period in dispute, which is the same period in the present case i.e. prior to 2002, cannot be equated with service tax and also there is a Board Circular dated 17-9-2004, which prima facie, support the applicants.(Para 2).

Pre-deposit waived.

Consulting Engineering Service: Appellants in India who were recipient of technical know-how from foreign company against payment of royalty, could not be fastened with liability to pay service tax as they were not authorised representative of the foreign company.

Service Tax: Consulting Engineers: Scope and taxability: Appellants were carrying out after sales service such as installation, commissioning, erection and further maintenance of equipment on their customers' premises. Prima facie erection, installation and commissioning are not covered under the category of Consulting Engineering service in the light of Circular No. 79/9/2004-S.T., dated 13-5-2004 and in view of the decision in the case of Yokogawa Blue Star Ltd. v. CCE, Bangalore-III reported in STO 2005 CESTAT 380 holding that prior to 1-7-2003, erection, commissioning and installation charges were not covered under the category of Consulting Engineering Services and hence Service Tax was not liable to be paid during the period of dispute i.e. prior to 1-7-2003.(Para 3).

Appeal allowed by way of remand.

Consulting Engineer : Payment of know-how and royalty is not consultancy and so also right to use trade mark is a transaction of property and no consultancy or advice is involved arid hence it has been held that the same is not liable to cheap replica men's watches Service Tax under consulting engineer.

Service Tax: Waiver of pre-deposit: Appellants are institute of technology. Apart from education, they are doing certain test as per the request of various clients. Having well equipped laboratory, testing is done in respect of steel , soil , soil investigation for building etc. As they are only doing test, they cannot be considered as consulting engineers.(Para 2).

Pre-deposit waived.
 

Stay : Consulting Engineer Service : in case services are rendered to a prime consultant, the levy of Service Tax does not fall on the sub consultant but it falls on the prime or main consulting engineer who raises a bill on his client including the charges for services rendered by the sub-consultant.

Service Tax: Engineering consultancy: Scope and taxability: The demand of service tax on the consideration paid by the appellants for transfer of technology by the Italian company has been held by the Tribunal that such transaction is not a service taxable under Section 65 of the Finance Act, 1994.(Para 2).

Appeal allowed.
 

Service Tax: Engineering consultancy service: Demand: During the period of dispute, a recipient, in India, of engineering consultancy service received from abroad was not liable to pay service tax as held in M/s. SAME Engines India Pvt. Ltd. v. C.C.E., Chennai) STO 2005 CESTAT 285. C.C.E. v. M/s. Reichie De Massari AG Switzerland) STO 2005 CESTAT 354], wherein technology transfer was held to be distinct and separate from engineering consultancy service.(Para 2).

Appeal allowed.
 

Consulting Engineering Service: Contract for Project Management: such construction contracts cannot be subjected to service tax as consulting engineering service, either as a whole or in part. Issue covered by Daelim’s case.

Consulting Engineer Service: Assessee carrying out erection and commissioning  of goods at customer's site and that not incorporated and included under 'Consulting Engineer Services' prior to 2003 via Circular No. 79/9/2004-S.T., dated 13-5-2004 and therefore not taxable. Order passed by Commissioner (Appeals) just and buy cheap replica watches online proper. Revenue's appeal rejected.

Service Tax: Photography services: Valuation of taxable service: In rendering photography services, there is no sale of material and therefore, no reduction is permissible in terms of exemption Notification No. 12/2003 dated 20.06.2003. Perusal of the records makes it clear that no evidence has been produced to show that the appellant was selling material separately. The Revenue's contention that there is no sale in rendering photography services is prima facie sound.(Para 3).

Stay application rejected, pre-deposit ordered.
 

Service Tax: Waiver of pre-deposit: Engineering Consultancy Service: Transfer of technology by foreign Company to India against payment of royalty was held not to be a taxable service under Section 65 of the Finance Act, 1994. Appellants do have a prima facie case.(Para 3).

Pre-deposit waived.
 

Service Tax: Demand: Whether work contract come under the purview of service rendered by a 'Consulting Engineer': Scope and liability: It is clear that different equipment and facilities in the factory of the Flex Chemicals Ltd. were being modified or fresh equipment added to increase the capacity. Thus, the agreement between the parties was for a work contract as correctly found by the Commissioner (Appeals). While passing the order, the Commissioner (Appeals) relied on the Order of this Tribunal in the case of Daelim Industrial Co. Ltd. v. CCE, Vadodara - STO 2003 CESTAT 9 wherein it was held that a work contract is not amenable to be taxed as engineering consultancy contract. Even if a work contract includes elements of engineering consultancy the contract cannot be vivisected and part of it subjected to tax as engineering consultancy. Commissioner's (Appeals) finding that the ratio of decision in the case of Daelim Industrial Co. Ltd. (supra) applied to the facts of the present case and the Commissioner (Appeals) had rightly followed that order.(Para 4,5).

Appeal dismissed.

Service Tax: Engineering consultancy services: Scope and tax liability: The liability for paying service tax shifted to recipient only w.e.f. 16th August, 2004. The demand is for service received prior to that date. Therefore, the appellant who is the recipient was not liable to pay it. The transfer of know-how and trade mark is not rendering of engineering of consultancy service. That is the view this Tribunal has taken in the cases of Aviat Chemicals (P) Ltd.STO 2004 CESTAT 9 (Para 4,5).

Appeal allowed.
 

Consulting Engineer Service : Transfer of technical know-how took place well before the levy was introduced. Since the time when service was provided is the relevant factor, no levy was attracted in the present case.

Service Tax: Engineering Consultancy Service: Demand: Prior to 16-8-2002, it was not open to the department to demand service tax on Engineering Consultancy Service from the service recipients. In this connection, they relied on Final Order No. 308/2005 dated 4-3-2005 STO 2005 CESTAT 354 (Para 1,2).

Pre-deposit waived.
 

Service Tax: Engineering Consultancy Service: Demand: Demand of tax is based on the appellants' audited Balance Sheet for F.Y. 1999-2000, wherein an amount of Rs. 12 lakhs was shown to have been paid to the appellants by M/s. Associated Cylinders and Accessories Pvt. Ltd. for "technical service" rendered to the latter. After examining the submissions, the appellants have not been able to make out a prima facie case.(Para 1).

Pre-deposit ordered.

Erection & Commissioning : the work of erection and commissioning do not come within the ambit of consulting engineer services.

Service Tax: Consulting Engineering Service: Demand: The transaction took place between a licensor supplying certain technical know-how and a licensee who is the recipient of such know-how. The relationship between a licensor-licensee is different from the relationship between a consultant-clients. Commissioner (Appeals) failed to appreciate that for Service Tax to be payable, a service provider-client relationship has to exist, which is not the case in the transaction between the Appellants and Pfizer. The term "client" is not defined under the Act. Pfizer are universally recognized as a pharmaceutical company, and cannot be considered to be "engineering firm". Neither the Appellants nor Pfizer would be considered as an "engineering firm" and consequently do not fall within the definition of "Consulting Engineer". An examination of the definition of "Consulting Engineer's services" indicates that the advice, consultancy or technical assistance sought to be covered is in respect of one or more disciplines of engineering. Here the subject matter of the transaction is the grant of a license for use of know-how in the manufacture and marketing of various pharmaceutical products. Such "know-how" is the subject of an intellectual property right. Commissioner (Appeals) has failed to appreciate that the "know-how" is an intellectual input into how certain pharmaceutical products can be manufactured and such "know-how" does not fall within one or more disciplines of engineering. (Para 2.1).

Appeal allowed.

Service Tax: Consulting engineers: Taxability: Appellants are performing an agency function of supervision of erection, commissioning & installation of the plant for the principal in Germany, prima facie they do not appear to be covered by the Service Tax provisions on consulting engineers when Order No. 79/9/2004 ST, dated 13-5-2004 is read with the nature of activity/service covered by Service Tax under the definition at 39(a).(Para 1,2).

Waiver of pre-deposit allowed.

Service Tax: Tax liability on recipient of services received from foreign company: The Respondents had been only receiving the services from the foreign company who are Consulting Engineers and the respondents are not their agents. Therefore, the service tax cannot be demanded from them as held by the Tribunal rulings rendered in the case of Navinon Ltd. v. CCE, Mumbai-VI - STO 2004 CESTAT 87 wherein it has been clearly held that the Service Tax could not be fastened on the recipient of the services received from foreign company. Judgment of the Tribunal in the case of Bajaj Auto Ltd. v. CCE, Aurangabad - STO 2004 CESTAT 11 wherein also it has been held that Service Tax cannot be demanded from the service receivers. The Commissioner's order is legal and proper and there is no infirmity in the same.(Para 5).

Revenue appeal dismissed.

Service Tax: Consulting Engineers: Scope: Provisions of Section 65(13) of the Finance Act, 1994, which defines 'Consulting Engineer', are not attracted in the light of the decision of the Hon'ble Gujarat High Court in the case of Chartered Accountants Association v. Union of India STO 2000 Guj 5, held in Para 14 that it is the services rendered by the professional which are taxed. In the present case, the respondent-firm does not consist of any professionally qualified persons so as to call them an engineering firm within the meaning of Section 65(13).(Para 2).

Market research agency: Scope: No service tax is leviable on them under Section 65(25) for the reason that there is no evidence on record to show that they had earned out any market research. The Board's Circular dated 7-10-1998 clarified that, "market research agency" is commercial concern engaged in conducting market research in any manner, in relation to any product or service.(Para 3).

Revenue appeal rejected.

Service Tax: Engineering Consultancy Service: Demand: Prior to 2003, this service was not taxable, nor was it covered by Engineering Consultancy Service. Only intangible services such as advice, consultancy etc. could be taxed as Engineering Consultancy Service. The service rendered by the appellants viz. calibration of measuring instrument was a tangible service and the same did not attract the definition of "consulting engineer" or "Engineering Consultancy Service."(Para 2). The notice did not specify as to whether the activity was performed by an Engineer. It is said to have been performed by "qualified personnel." According to the definitions of "Consulting Engineer" and "Engineering Consultancy Service", such service, should be rendered by a professionally qualified Engineer or Engineering firm. Impugned order set aside(Para 3).

Appeal allowed.

Service Tax: Engineering Consultancy Service: Demand on repair and maintainance charges of washing machines under AMC: What is comprised in "consulting engineer" and "engineering consultancy service" is advice, consultancy or other intangible service in the nature of technical assistance, given to clients in one or more of the disciplines of engineering. Here, one party renders the service to his client when consulted by the latter in one of the disciplines of engineering. It is the latter who does the tangible act in accordance with the advice given by the former. This is true of "technical assistance in any manner" also, as this expression, requires to be read ejusdem generis with "advice" and "consultancy". In other words, "engineering consultancy service" is an intangible service. But the service rendered by the appellants during the period of dispute was a tangible service inasmuch as they were physically repairing or maintaining the machines, which can hardly be equated with intangible services such as advice, consultancy etc. It would follow that the repair and maintenance of machines undertaken by the appellants under AMCs with their buyers beyond the warranty period were not covered by "engineering consultancy service". This activity became taxable service only with effect from 1-7-2003.(Para 3).

Appeals allowed.
 

Consulting Engineer Service : Work Contract : There is a turnkey project which cannot be vivisected

Consulting Engineer: If a manufacturer undertakes consultancy in addition to manufacture, it will be liable to tax in regard to the service rendered. It has no application to where the agreement is for transfer of intellectual property and no consultancy service is rendered. The value of incidental advice, if any, cannot be cut out and subjected to Service Tax.

Service Tax: Engineering consultancy: Demand: Know-how patent, trade mark are intellectual property and trading in them is not rendering any service, but is transfer of property. The issue raised in appeal remains covered in favour of the appellants by the judgment of this Tribunal in the case of M/s. Bajaj Auto Limited v. CCE&C, Aurangabad - STO 2004 CESTAT 11 and Navinon Ltd. v. CCE, Mumbai-VI -  STO 2004 CESTAT 87. Tribunal held that royalty paid towards right to use trade mark is not consultancy or advice and not subject to levy of service tax on engineering consultancy. Similarly, Indian Co. is not an agent in the absence of specific authorization and no liability for payment of tax rested on it, according to the judgments.(Para 4,8).

Revenue appeal rejected.
 

Service Tax: Consulting engineer: Demand: The appellant in their balance sheet treated this amount as design and development charges. Appellants were charging for the design and development of tooling, which were used in the manufacture of the rubber components of the motor vehicle. The rubber components were cleared on the payment of excise duty and the value of rubber components are also included to the cost of these tooling. Demand set aside(Para 4).

Appeal allowed.

Service Tax: Engineering Consultancy: Scope: Demand: The appellants are recipients, and not providers, of alleged taxable service. The service providers are a foreign company, not resident in India. When a taxable service is provided by such a person, the service recipient can be called upon to pay the tax w.e.f 16-8-2002. Such provision are without retrospective effect. The period of dispute in this case is prior to this said date hence service recipients were not liable to pay Service tax. This position has already been settled by a Division Bench of this Tribunal in the case of Navinon Ltd. v. CCE, Mumbai - 2004 (172) E.L.T. 400 (Tri.-Mumbai).(Para 3,4).

Appeal allowed.

Service Tax : Consulting Engineers Service : Meaning of “Person” and “Concern” : The word "person" as defined in Section 3(42) of the General Clauses Act includes an individual, a company or an association of persons. A "person" includes a juristic person. A company is a juristic person and there would be no difficulty to include a company when the definition uses the expression "person". Similarly, a "concern" without any qualification can include any business or professional establishment and the "commercial concern" would include all concerns connected with commerce carrying on trade or profession or any kind of commercial activities and includes a company. The context in which these definitions were given was intended to identify a particular class of assessee liable to pay service tax. Nothing seems to appear from the scheme and the context in which the legislation was enacted to make a rational or intelligible differentia to exempt one class within the class. (para 12, 16,17)

Service Tax: Consulting Engineers Service: Firm includes Company: It is inconceivable that a consulting engineer as an individual or constituting a partnership firm or a proprietorship firm would be liable to pay tax under the service tax laws, but the same persons forming a company, a different juristic person, a distinct legal entity apart from the shareholders, would be outside the tax net. No reason as to why a company providing "taxable service" as defined under Section 65(48)(g) would not be a taxable service, when it would be so when provided by an individual qualified engineer or a proprietorship or partnership firm of engineers. (para 18)
Service Tax : Consulting Engineers’ Service : Section 65 of Finance Act, 1994 : Rule 6 in sub-rule (1) provides that service tax on the value of the taxable service received during the calendar month shall be paid to the credit of the Central Government by the 25th day of the month immediately following. The proviso, however, carves out an exception in respect of the assessee, who is an individual or a proprietary firm or a partnership firm, who are supposed to pay on the 25th day of the month immediately following the quarter in which service tax in the value of taxable service is received. (para 20)

Service Tax : Consulting Engineers Service : Meaning of “Firm” : It is the responsibility of the court to interpret the word in a manner consonance with the scheme and the object and its purpose as well as the different expressions used in the statute unless a different intention of the Legislature is apparent to impute a different meaning. While fixing the liability on account of breach of the provisions of the statute, a company has been explained to include a partnership firm. It appears that the Legislature had never intended to make any distinction between a firm and a company for the purpose of defining "consulting engineer". the word "firm" used in the definition of "consulting engineer" interpreted in the context and the scheme of Section 65 in consonance with Section 66 and Section 68 and meaning conferred to the word "firm" elsewhere in the statute includes company as explained in Section 81 (para 21,30)

Service Tax: Consulting Engineers Service: Beneficial Interpretation: Engineering Firm: If two views are possible, and one leads to absurdity, the other possible view is to be accepted. The principle of beneficial interpretation in favour of the assessee cannot come into play on the face of absurdity. The use of the word "firm'' qualified by the word "engineering'' was intended to denote a conglomeration of engineers providing taxable service in its ordinary, common and natural sense. The words "engineering firm" denote an establishment of engineers providing taxable service defined under Section 65(48)(g). The Legislature had never used nor-intended to use: the word "firm" in its legal or technical sense. (para 22)

Service Tax: Consulting Engineers Service: Meaning of Words in the statute: Words used in a statute dealing with matters relating to the general public are presumed to have been used in their popular rather than narrow, legal or technical sense. The doctrine of loquitur ut vulgus, i.e., according to the common understanding and acceptance of the terms, is to be applied in construing the words used in the statute dealing with matters relating to the public in general. If an Act is directed to dealings with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. The word "firm" was not used for the purpose of indicating the constitution of the firm, namely, a proprietorship or partnership, but in order to identify a class of firm providing taxable service within the meaning of Section 65(48) (g). (para 23,24)

Service Tax: Consulting Engineers Service : Scope of: The Act aims at levying tax on service. It is the taxable service, which makes the provider liable. Thus, the taxable event is the providing of service and the levy falls on the provider. It would be inconceivable that the Legislature had intended that the levy would fall on a provider when an individual or a proprietorship or partnership firm but not when a company. The distinction seems to be unintelligible and without any rationale, thus absurd. (para 25)

Service Tax: Consulting Engineers’ Service : Sub-ordinate Legislation : It cannot be said that the said circular was issued excess of the parameters limited by the legislation delegating the power is well within the parameters and, therefore, can never be ultra vires the parent Act or void. Since it is well with the enactment, it is not a case that a tax is being imposed by reason of the said two circulars on the company though not liable through subordinate legislation without being authorised by the parent Act (para 29)

Service Tax: Waiver of pre-deposit: Only w.e.f. 16-8-2002, the relevant rules were amended to the effect that receiver of the services is required to pay service tax in a situation where the service provider is situated out of India. The contention is that their goods were supplied and exported prior to 21-12-2000 i.e. prior to the amendment and that there is no evidence on record to show that they are the agent of the foreign suppliers. (Para 4,6).

Pre-deposit waived.
 

Service Tax: waiver of pre-deposit: Appellants were only furnishing the drawing and design and there was no giving any advise in the nature of 'consultancy' to their clients. The learned Counsel relies on this Bench judgment (Stay Order No. 1085/2004, dated 21-10-2004) STO 2004 CESTAT 6 rendered in the case of M/s. Araco Corporation v. CCE, Bangalore. The Board Circular No. B2/8/2004-TRU, dated 10-9-2004 brings the appellants within the service tax net with effect from 10-9-2004 and hence the earlier period of this matter is not covered by the Act.(Para 1,3).

Pre-deposit waived.
 

Service Tax: Consulting engineer: Waiver of pre-deposit: The applicants being the receiver of service from Ausmelt, a non-resident not having an office in India, are liable to pay service tax under Rule 2(1)(d)(iv). Appellants have made payment to foreign consulting engineer in Dec. 2002. Thus no strong prima facie case in favour of Appellants.(Para 4).

Pre-deposit ordered.
 

Service Tax: Consulting Engineers: Demand: Scope: Their activity cannot be considered as activity of 'consulting engineers' for the purpose of levy of Service Tax as they had transferred only technology by assigning their rights and it does not come as services in terms of the definition for levying the Service Tax. In a similar case, the Tribunal by Stay Order No. 1169/2004 dated 22-11-2004 in the case of Turbotech Precision Engineering Pvt. Ltd. v. CCE, Bangalore, has granted full waiver of pre-deposit of Service Tax and penalty amounts(Para 1,2).

Stay granted.

Service Tax: Services like design development, design review, installation and commissioning and technology transfer for study and design of oil free compressor systems for the period from 7-7-1997 to 31-3-2001: Scientific and Technical Consultancy with effect from 16-7-2001: Scope and liability under the category of Consulting Engineer's services: Tribunal in the similar matter in case of M/s. Araco Automotive India (P) Ltd. has granted full waiver of pre-deposit of Service tax and penalty and stayed its recovery in the matter. The Tribunal (Mumbai Bench) has also passed a Final Order in case of Navinon Ltd. v. Commissioner of Central Excise, Mumbai-VI, reported in. = STO 2004 CESTAT 87 Therefore the appellants have strong prima facie case in their favour (Para 3).

Pre-deposit waived, stay allowed.

Service Tax: Consulting Engineer services: Demand: The definition indicates that it is the advice, consultancy or technical assistance rendered by a "Consulting Engineer" that are liable to be taxed under the Finance Act, 1994. Any amount collected by the Consulting Engineer towards cost of construction of any building cannot be brought within the purview of "advice, consultancy or technical assistance". The assessee in this case is a Civil Engineer. Any service rendered by him by way of "advice, consultancy or technical assistance" to his clients will be taxable. The orders of the lower authorities do not disclose as to what amount or amounts were collected by the assessee towards fee for "advice, consultancy or technical assistance" from their clients during the material period. This requires to be worked out by the original authority and any demand of service tax quantified accordingly.(Para 3)

Soil test results: The advice given by the assessee to their customers as to suitability of the latter's land for building construction was, indisputably, based on the soil test results and any amount collected towards soil test should be treated as integral part of the consideration collected for technical advice.(Para 4).

Appeal allowed by way of remand.

Service Tax: Engineering Consultancy Service: Scope and liability :Waiver of pre-deposit: Repairs and Maintenance Service was not liable to be placed under Engineering Consultancy Service. As held in the Tribunal's decision in STO 2004 CESTAT 102.(Para 1).The demand is on the service of calibration of equipments. The appellants' case, made out today by their Counsel, is that this service is not an Engineering Consultancy Service. Their claim is that the above service has been specified for the first time as 'Technical Inspection and Certification Service' with effect from 1-7-2003 for the purpose of service tax.(Para 2).

Consulting Engineering Service: The operator is fully autonomous and responsible for the performance of operation and maintenance. Whatever engineering issues are involved, it is for the operator to find solutions for, and attend to in the course of operation and maintenance. He is not required to render any advice or to take any orders from the owner. He cannot pass on the responsibility for operating the plant in any manner to the owner. Thus, there are no two parties, one giving advise and the other accepting it. Service tax is attracted only in a case involving rendering of service, in this case, engineering consultancy.

Service Tax: Consulting Engineer's Services: Technical Service Charges: Scope and Liability: The judgment of the Hon'ble High Court of Karnataka reported in CEO 2001 Kar 32 in the case of Tata Consultancy Services v. Union of India and the judgment of Hon'ble Calcutta High Court reported in STO 2001 Cal 232 (Cal.) in the case of M.N. Dastur & Company Ltd. v. Union of India, wherein it has been held that, the Act does not make any distinction between different categories of service providers, be they individuals, partnership concerns or the incorporated companies. In the light of the judgments as referred to above, it is obvious that, the appellants having rendered the services of a consulting engineer to a client, are liable to the service tax.(Para 6,7).

Appeal rejected.

Service Tax: Consulting engineering service: Demand: Stay: Design and development charges are paid by the vehicles manufacturers to help the appellants to meet the initial layout of expenditure in developing tooling and mould necessary for the manufacture of the components. The activity undertaken by the appellant would not come within the term 'service rendered by a consulting engineer'.(Para 2).

Service tax: Consulting Engineering Services, a work contract on turnkey basis including incidental design, drawing and commissioning work is not to be treated as consultancy contract by vivisecting and subjecting part of it to tax. The issue in the present case to be examined on this principle, matter remanded.

Consulting Engineer Service: Work Contract: Department contended that design element of these works contract would be liable to service tax. Work contract cannot be vivisected a part of it cannot be subjected to service tax.

Consulting Engineer : When an "engineer" becomes a "registered valuer" of immovable property or plant and machinery, he is obviously rendering the service as a "consulting engineer" within the meaning of section 65(48)(g) of the Finance Act, 1994.

Penalty : The authorities have got a discretionary power while imposing the penalty. The Supreme Court, time and again, has taken the view though penalty is imposable as per the statute; the minimum penalty can be imposed depending upon the facts and circumstances of each case.

Service Tax: Waiver of pre-deposit: It is difficult to conceive of repair conducted by the persons on the goods that it sold, to be service provided by consulting engineer. Partial pre-deposit ordered.(Para 4).

Service Tax: Consulting Engineer services: Scope: Hon'ble High Court of Karnataka in the case of STO 2001 Kar 216 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.(Para 7.1). Hon'ble High Court of Madras in the matter of STO 2001 Mad 217 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. Going by the definition of the term "Consulting Engineer" and "Valuers" and the clarification issued by the Department, functions performed by the Respondent herein come within the ambit of the term "Consulting Engineer".(Para 8).

Work Contract: Clauses of the contract leaves no doubt that the appellant contract with IOC was a work contract on turnkey basis and not a consultancy contract. It is well settled that a work contract cannot be vivisected and part of it subjected to tax.

Consulting Engineering Service : Even adopting the strict view of the taxing statute it would have to be held that the advice offered by an engineer either it is a firm or an individual or a company on the basis of his engineering knowledge in respect of immovable property valuation would certainly amount to an advice which is integrally connected with the "engineering discipline"

Service Tax: Consulting Engineers’ Service: Registered Valuers of Plant and Machinery - It is obvious that those qualifications are not merely holding a engineering degree but such persons would be required to have a certain standing as an engineer, which is of quite "high standard". In so far as the case of the valuers of plant and machinery is concerned, there has to be advice, consultancy service or technical assistance in the subjects completely connected with the engineering. Such "registered valuers" of plant and machinery would fall within the definition of "consulting engineer" and their services of valuation of plant and machinery would be covered as "taxable service" offered by "consulting engineer". (para 12)

Service Tax: Consulting Engineers’ Service: Registered Valuers of immovable property: A consulting engineer has to use his experience and knowledge of engineering necessarily to arrive at a correct valuation of the immovable property. Wherever an advice is given by an engineer on the basis of his engineering knowledge, skill and experience then such an advice would be in the realm of "engineering advice" or atleast pertaining to the "engineering discipline". Even adopting the strict view of a taxing statute, it would have to be held that the advice offered by an engineer on the basis of his engineering knowledge in respect of immovable property valuation would certainly amount to an advice which is integrally connected with the "engineering discipline". Therefore, when an "engineer" becomes a "registered valuer" of immovable property or plant and machinery, he is obviously rendering the services as a "consulting engineer" within the meaning of Section 65(48)(g) of the Finance Act. (para 17)

Service Tax: Consulting Engineers’ Service: Service Tax is different from Profession Tax: Legislative Competence: The tax covered under the provisions of the Finance Act is not a tax on profession and is not beyond legislative competence of the Parliament. (para 20)

Service Tax: Consulting Engineers’ Service: Arbitrary taxation: In respect of challenge under Article 14 of the Constitution of India, the argument is that while the other professionals are not taxed, the "consulting engineers" are taxed and, therefore, it is arbitrary. The argument is clearly untenable and has to be rejected as "consulting engineers" is a "class" by themselves. That apart, it would be a "legislative wisdom" on the part of the Parliament to decide as to which "class" should be taxed and which "class" should not be taxed. That will be clearly outside the "judicial review". (para 23)

Consulting Engineering Service: There is nothing repugnant in the subject or context of the Act, which should prevent the inclusion of a Company for purposes of levy of service tax on any advice, consultancy or technical assistance provided by it to its clients in regard to one or more disciplines of engineering. Indeed, if the argument advanced on behalf of the petitioner is accepted, it would remove all companies providing technical services, advice or consultancy to their clients from the tax net while any such services rendered by an individual or a partnership concern would continue to remain taxable. The Act does not envisage any such classification let alone create and perpetuate anomalies that would flow from the same.

Service tax: Constitutional validity of Section 88 of the Finance Act, 1997 and Section 116 of the Finance (No.2) Act, 1998 levying service tax on the Consulting engineers and Architects and also on the practicing chartered Accountants: Apex court has clearly laid down that the tax on profession can be imposed if a person carries on a profession and that such a tax is irrespective of the question of income. This clearly means that if the Parliament levies tax on the services rendered by the professional by reference to the gross receipts received by a professional for the services rendered by him, it is not a tax on profession because the professional tax is a tax levied on a person carrying on any profession irrespective of his income. This decision, therefore, destroys argument that tax on profession and the tax on the services rendered by the professional are the same thing.(Para 7.6). The Constitution, however, recognizes this distinction clearly by specifically providing in Article 276(3) that the power of the Legislature of a State to make laws aforesaid with respect to taxes on professions, trades, callings and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on income accruing from or arising out of professions, trades, callings and employments. Moreover, just as the Parliament has the power to levy tax on manufacture of goods as per Entry 84 in the Union List, the Parliament also has the power to levy tax on the services being rendered by a professional.(Para 8). It cannot, be said that the classification between the qualified professionals like chartered accountants, engineers and architects on the one hand and non-qualified persons rendering their services in similar fields on the other hand is unreasonable or that the classification has no reasonable nexus with the object sought to be achieved in collection of revenue.(Para 13). the tax is on the services being provided. The nature of services provided by a qualified chartered accountant, qualified consulting services rendered by non-qualified persons in the same or similar fields. Hence, when the Legislature has made a classification between the services rendered by a qualified professional and the services rendered by a non-qualified person in similar or same filed, the classification is not hit by Article 14. The services per se are not taxed. It is the services rendered by the professional which are taxed. Merely because it is the professional who is required to collect and pay the tax, it does not mean that the tax is on the professional.(Para 14).

Writ petitions dismissed.