By TIOL News Service

MUMBAI, SEPT 12, 2015: THE appellant rendered the services of finalising acquirement of ship for Union Territory of Lakshadweep and also overseeing the activity of procurement, monitoring other agencies for progress of construction of vessels, conducting shop trials for main engine and to supervise model test at Danish Maritime Institute. For these services, the appellant charged the Union Territory of Lakshadweep.

This, the Revenue says, amounts to providing 'Consulting Engineer Service' and the appellant is liable to pay Service tax.

The lower authorities confirmed the demand.

Before the CESTAT, the appellant submitted that they helped the UT of Lakshadweep to procure the vessel for movement of men and material between Lakshadweep and mainland. Further, since they are a company incorporated under the Companies Act, they cannot be considered as a 'Consulting Engineer' as per the definition during the relevant period 26/02/1999 to 26/01/2004. It is also submitted that the issue is now squarely covered by the decision of the Delhi High Court in the case of Simplex Infrastructure and Foundry Works - 2013-TIOL-441-HC-DEL-ST and the High Court of Karnataka in Turbotech Precision Engineering Pvt. Ltd. - 2010-TIOL-498-HC-KAR-ST wherein the definition of 'consulting engineer', as it stood during the relevant period and post its amendment, were considered and a view was taken in favour of the appellant.

The AR stuck to the departmental stand.

After reproducing the definition of 'Consulting Engineer' as appearing during the material period, the Bench,while mentioning that it was not convinced with the arguments put forth by the AR and the lower authorities, observed -

+ …it has to be noted that the 'consulting engineer' means a professionally qualified engineer and would also include an engineering firm. We find that, subsequently in 2006 an amendment was carried out and the definition of 'consulting engineer' was changed to include 'any body corporate' or any other firm.

+ The appellant herein is not a consulting engineer. They are experts in the shipping business and were called upon by the Union territory of Lakshadweep to assist them in finalising the kind of a ship that may be required for movement of men and material from island to mainland.

+ Secondly, a similar issue, as to whether a private limited company registered under the Companies Act gets covered under the definition of 'consulting engineer' during the period in question was decided (in favour of assessee) by the Hon'ble High Court of Delhi in the case of Simplex Infrastructure and Foundry Works (supra) …

Holding that the issue involved in the case on hand is squarely covered in favour of the appellant by the aforesaid decision, the impugned order which upheld the service tax liability with interest and penalties was set aside and the appeal was allowed with consequential relief.

(See 2015-TIOL-1921-CESTAT-MUM )