CESTAT,
Power Best Electricals Ltd.
v.
Commissioner of Central Excise, Calicut
DR. S.L. PEERAN, JUDICIAL MEMBER
AND T.K. JAYARAMAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 1258 OF 2007
APPEAL NO. ST/160 OF 2006
October 30, 2007
Section 65 of Finance Act, 1994 - Consulting engineer -
Period from 1-7-2003 to 31-3-2004 - Assessee was an electrical contractor
undertaking electrical works such as wiring, rewiring and maintenance of
electrical systems and also supplied electrical materials required by companies
for approval of electrical inspectorates - Revenue proceeded against assessee
on ground that assessee failed to pay service tax under category of services of
consulting engineer and also commissioning installation and reaction services -
Demand was confirmed by original authority along with penalties - On appeal,
Commissioner (Appeals) confirmed demands of service tax made, however, set
aside all penalties - In that order, Commissioner observed that pre-design drawing technical assistance rendered by
assessee were also part of contract work undertaken by it and even if it had
engaged qualified engineers from outside and sub-contracted same, it would be
liable to pay service tax as a consulting engineer - Whether, since
assessee was an electrical contractor and not a qualified engineer or an
engineering firm, it was not correct to demand service tax for pre-design
drawing prepared by some other agency or person under category consulting
engineer - Held, yes - Whether since 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 from 14-2-2005, and period issued in
instant case was prior to that period namely 1-7-2003 to 31-3-2004, demand in
respect of commissioning, installation and erection, was not sustainable -
Held, yes [Para 6]
Circulars & Notification : 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
required by companies for approval of electrical inspectorates. The revenue
proceeded against the assessee on the ground that it failed to pay service tax
under the category of services of ‘consulting engineer’ and also ‘commissioning
installation and erection services’. The original authority confirmed the
demand alongwith penalties. On appeal, the Commissioner (Appeals) confirmed the
demand of service tax made, however, he set aside all penalties.
On appeal:
HELD
The entire
demand was relating to the period from 1-7-2003 to 31-3-2004. The demands were
on account of two services. For the period from 1-7-2003 to 31-3-2004 the
charges related to commissioning, installation and erection. For the period
from 1-7-2003 to 31-3-2004 the allegation against the assessee was that it
rendered the services of consulting engineer. In the impugned, the Commissioner
(Appeals) had stated that pre-design drawing technical assistance rendered by the
assessee was also part of the contract work undertaken by it. Even if 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 has not done any engineering consultancy.
If he had got the pre-design drawing 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 pre-design drawing prepared by
some other agency or person. Therefore, no service tax could be demanded from
the assessee who was only an electrical contractor As regards the
commissioning, installation, erection services provided it was seen that the
services actually related to erection of 11 KV Transformer. The assessee had
stated that the commissioning and installation was normally done by 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 nom 10-9-2004. The attention was invited to Board
circular dated 20-6-2003 as amended by Circular dated 21-8-2003 wherein it was
clarified that erection of plant was not covered by the term commissioning and
installation. The department also proposed to include the service charges for
wiring, cable laying etc., prior to the change of definition to include such
services before 14-5-2005 when the Finance Act was amended to include services
such as wiring. Prior to enactment of the Finance Act 2005 with effect of
14-5-2005, electrical wiring or installation of bulbs, fans etc., were not
taxable services. The assessee was 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 instant case was prior to that
period namely 1-7-2003 to 31-1-2005 in respect of commissioning, installation
and erection, demand confirmed was not sustainable, in view of the above, the
appeal was to be allowed. [