Power
Best Electricals Ltd.
v.
Commissioner
of Central Excise, Calicut
Dr.
S.L. Peeran, Judicial Member
and
T.K. Jayaraman, Technical Member
Final
Order No. 1258 of 2007
Appeal
No. ST/160 of 2006
October
30, 2007
CONSULTING
ENGINEER
Section 65 of
the Finance Act, 1994 - Consulting engineer - Period of 1-7-2003 to 31-3-2004 -
Whether before slapping any demand on a person in respect of services rendered
as consulting engineer, it should be done only on condition that person who
renders such service is found be a qualified engineer - Held, yes - Assessee
was an electrical contractor undertaking electrical works such as wiring,
rewiring and maintenance of electrical systems and also supplied electrical
materials and designs of electrical drawings prepared by some other agency
required by companies for approval by electrical inspectorates - Revenue
proceeded against assessee on ground that assessee had failed to pay service
tax on account of charges received for preparation of designs under category of
‘consulting engineer’ - Demand was confirmed by original authority along with
penalties - It was not established that assessee was a qualified engineer -
Assessee was only an electrical contractor and moreover, he had not done any
engineering consultancy; if it had got designs of electrical drawings done by
some other agency or some other consulting engineer, only that agency or
consulting engineer would be liable to pay service tax in category of
consulting engineers - Whether in circumstances, it was not correct to demand
service tax from assessee for designs of electrical drawings prepared by some
other agency or person - Held, yes [Para 6]
Section 65 of
the Finance Act, 1994 - Erection, Commissioning or installation - Period
1-7-2003 to 31-3-2004 - Assessee was an electrical contractor undertaking
electrical works such as wiring, rewiring and maintenance of electrical systems
- Department proposed to levy service tax on account of charges received by
assessee for erection of transformer - Commissioning and installation was done
by State Electricity Board - What assessee had undertaken was only erection of
transformer which was done on 17-1-2004 and erection services became taxable
only with effect from 10-9-2004 - Whether no service tax could be demanded from
assessee for period in question - Held, yes [Para 6]
Section 65 of
the Finance Act, 1994 - Erection, Commissioning or installation - Period
1-7-2003 ot 31-3-2004 - Whether prior to amendment of definition of erection,
commissioning or installation by Finance Act, 2005 with effect from 14-5-2005,
electrical wiring or installation of bulbs, fans, etc., were not taxable
services - Held, yes [Para 6]
Circulars and
Notifications : Circular No. 59/8/2003, dated 20-6-2003.
>> Facts
The assessee was an electrical
contractor undertaking electrical works such as wiring, rewiring and
maintenance of electrical systems and also supplied electrical materials and
designs of electrical drawings required by companies for approval by electrical
inspectorates. The revenue proceeded against the assessee on the ground that it
had failed to pay service tax on account of charges received for preparation of
designs of electrical drawings under the category of ‘consulting engineer’. The
revenue also demanded service tax under the category ‘commissioning,
installation and erection services’ for erection of transformer. The original
authority confirmed the demand along with penalties. On appeal, the
Commissioner (Appeals) confirmed the demand of service tax made, however, he
set aside all penalties.
On appeal :
>> Held
In the impugned order, the
Commissioner (Appeals) had stated that technical assistance in respect of
designs of electrical drawings rendered by the assessee was also part of the
contract work undertaken by it. Even if the assessee had engaged qualified
engineers from outside and sub-contracted the same, it would be liable to pay
the service tax as a consulting engineer. Before slapping any demand on a
person in respect of services rendered as consulting engineer, it should be
done only on condition that the person who renders such service is found to be
a qualified engineer. In the instant case, it was not established that the
assessee was a qualified engineer or an engineering firm providing the services
of consulting engineer. The assessee was only an electrical contractor and,
moreover, he had not done any engineering consultancy. If it had got the
designs of electrical drawings done by some other agency or some other
consulting engineer, only that agency or consulting engineer would be liable to
pay service tax in the category of consulting engineers and it was not correct
to demand the service tax from the assessee for designs of electrical drawings
prepared by some other agency or person. Therefore, no service tax could be
demanded from the assessee who was only an electrical contractor. [Para 6]
As regards the commissioning,
installation, erection services provided by it, the services actually related
to erection of 11 KV Transformer. The assessee had stated that the
commissioning and installation was normally done by the State Electricity
Board. What the assessee had undertaken was only the erection of the
transformer which was done on 17-1-2004. The erection services became taxable
only with effect from 10-9-2004. Thus, no service tax could be demanded from
the assessee for the period in question. [Para 6]
The department also proposed to
include the service charges for wiring, cable laying, etc. The definition of
erection, commissioning or installation was amended by the Finance Act, 2005,
with effect from 14-5-2005 to include services such as wiring. Prior to
enactment of the Finance Act, 2005 with effect from 14-5-2005, electrical
wiring or installation of bulbs, fans, etc., were not taxable services. Since
the period involved in the instant case was prior to that period namely,
1-7-2003 to 31-3-2004, in respect of commissioning, installation and erection,
demand confirmed was not sustainable. [Para 6]
Varadaraja for the Appellant. K.S. Reddy for
the Respondent.
nn