ST - in SCN there is not even single line describing as to what is actual service rendered which is sought to be covered under Consulting Engineer, which fact itself, is arguably fatal - services rendered of engaging contractors cannot be stretched to come within scope of Consulting Engineer : CESTAT
By TIOL News Service
NEW DELHI, AUG 25, 2014: SERVICE Tax demand of Rs.68,15,221/- has been confirmed against the appellants along with interest and penalties.
It is alleged that during the period 2002-2003 to 2005-2006 the appellants had collected supervision charges amounting to Rs.7,79,91,577/- relating to construction of NavodayaVidyalaya building and that the said amount was liable to service tax under the category of Consulting Engineer Servicewhich the appellants did not pay by indulging in suppression of facts.
Before the CESTAT, the appellant contended that the amount on which service tax has been demanded was received from NavodayaVidyalayaSamiti for execution of works based on the architectural drawing, specification etc. given by Navodaya Vidyalaya Samiti or their appointed consultants; that this activity does not fall within the scope of Consulting Engineer Service; that during the relevant period, companies were not included in the definition of Consulting Engineer and that there has been no willful mis-statement or suppression of facts on their part as alleged in the SCN.
The Revenue representative justified the demand.
The Bench referred to the following -
+ Definition of Consulting Engineering Service:
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.
+ Extract of Allegation/upholdingcharge of suppression in SCN/O-in-O:
Since the assessee has not paid service tax by reason of suppression of fact and contravention of the provision of chapter V of the said Act, or the rules made there-under, with intent to evade payment of service tax; thus the extended period of five years provided in proviso to sub-section (1) of section 73 of the Act, is applicable.
The CESTAT, thereafter, made the following observations -
++ It is seen that in the Show Cause Notice there is not even a single line describing as to what is the actual services rendered by the appellants which are sought to be covered under the Consulting Engineer Service. This itself arguably can be fatal.
++ It is further seen from the agreement between NavodayaVidyalayaSamiti and the appellants that the appellants were engaged for execution of works based on the architectural drawings, specification etc. given by the Samiti or their consultants. The agreement also states that the appellants would be entitled to supervision charges for supervision of the works done by contractors engaged by the appellants. These supervision charges are sought to be taxed under the Consulting Engineer Service.
++ From the definition of Consulting Engineer Service it is evident that the appellants cannot be said to have rendered any advice, consultancy or technical assistance to the NavodayaVidyalayaSamiti inasmuch as, as per the agreement, the appellants were engaged to execute the works (constructing building for NavodayaVidyalaya ) as per the design and specifications given by NavodayaVidyalayaSamiti, which the appellants did by engaging contractors and supervising their (i.e. contractors) work. Thus, the service rendered by the appellants cannot be stretched to come within the scope of the above definition.
++ On the invocation of extended period while confirming the demand, the Bench observed - It is evident that the contents of the above para are totally inadequate to sustain the charge of suppression of facts. Indeed it is repeatedly held in several judgements that mere non registration, non-filing of ST-3 return or non-payment of service tax (or even all three of these) are by themselves not sufficient for sustaining the allegation of suppression of facts for invocation of extended period. There has to be on the part of appellants some act of omission or commission which at least points towards their intent to evade the tax. The law on this point is too well-settled to need reference to a series of judicial pronouncements on this issue. It is seen that even the Show Cause Notice does not elaborate as to how the appellants are guilty of suppression of facts. Indeed the Show Cause Notice also merely contains the same para (reproduced above) for this purpose which has simply been reproduced in the impugned order also. It is thus evident that the allegation of suppression of facts with intent to evade service tax is far from having been established.
++ In view of the judgments in the cases of Turbotech Precision Engineering Private Limited 2010-TIOL-498-HC-KAR-ST , Consulting Engineer Groups Limited, 2014-TIOL-936-CESTAT-DEL , Simplex Infrastructure & Foundry Works 2013-TIOL-441-HC-DEL-ST , it has been categorically held that a company or body corporate was not covered in the scope of Consulting Engineerbefore the amendment to the definition of Consulting Engineer with effect from 01.05.2006. It is seen that the demand period involved in the present appeal is prior to 01.05.2006. Thus, the appellants being a company or body corporate were outside the ambit of Consulting Engineer during the relevant period and consequently the service rendered by them was outside the scope of Consulting Engineer Service.
Holding that the order is not sustainable, the appeal was allowed.
(See 2014-TIOL-1588-CESTAT-DEL)
