If the aggregate value of the taxable services provided by a service provider in a financial year is up to Rs 4 Lakh, there is no liability on the service provider to pay the service tax as it is exempted vide Notification No 6/2005-service Tax dated 1 March 2005. However, the benefit of exemption is available subject to the following conditions:
a) Service is not provided by the service provider under a brand name or trade name
b) Value of service shall be aggregate value not exceeding Rs 4 Lakh from one or more premises and from one or more taxable service
c) In the last preceding financial year, aggregate value of all taxable services provided from one or more premises does not exceed Rs 4 Lakh
d) It is obvious that service provider should not avail the credit of service tax paid on the input service under the CENVAT Credit Rules, 2004
e) In case aggregate value of taxable service exceeds Rs 4 lakh, the first consecutive payments upto Rs 4 Lakh will be exempted. Subsequent payments will be subject to tax. Further, in the subsequent year, the benefit of exemption will not be available as the aggregate value of the preceding year will exceed Rs 4 Lakh
f) The exemption is not available for the services in respect of which the service receiver is liable to pay the service tax on the services availed by him, as in the case of Goods Transport Agency Service. Irrespective of the aggregate value of taxable service provided by a corporate service provider, if any freight has been paid, service tax has to be paid by the company.
Wednesday, December 27, 2006
Monday, December 25, 2006
14. Rate of Service Tax
Presently Rate of service tax is 12%, and education cess @ 2% and secondary and higher education cess @1% on service tax is also payable. Effective rate is 12.36%
Friday, December 22, 2006
13. List of disciplines of science
• Acoustical engineering
• Aquatic and environmental engineering
• Aerospace engineering
• Agricultural engineering
• Architectural engineering
• Audio engineering
• Automotive engineering (automotive systems engineering)
• Behavioral engineering
• Biological engineering
• Biomedical engineering
• Biomaterials engineering
• Bioresource engineering
• Ceramic engineering
• Chemical engineering
• Civil engineering
• Coastal engineering
• Combat engineering
• Communications system engineering
• Construction engineering
• Control engineering (control systems engineering)
• Ecological engineering
• Electrical engineering
• Electronics engineering (includes microelectronics engineering, microelectronics and semiconductor engineering)
• Electromechanical engineering
• Engineering science and mechanics
• Engineering physics (engineering science)
• Environmental engineering
• Computational finance (financial engineering)
• Fire protection engineering
• Food process engineering
• Forensic engineering
• Forest engineering
• Genetic engineering
• Geomatics engineering
• Geotechnical engineering
• Industrial engineering (includes production engineering)
• Information engineering
• Instrumentation engineering
• Integrated engineering
• Industrial engineering (includes manufacturing engineering)
• Landscape engineering
• Marine engineering
• Materials engineering (includes metallurgical engineering)
• Mechanical engineering
• Mechatronics
• Microsystems engineering
• Military engineering
• Minerals process engineering
• Mineral engineering
• Mining engineering
• Nanoengineering
• Neural engineering
• Nuclear engineering
• Optical engineering
• Ocean engineering
• Paper engineering
• Photovoltaics engineering
• Petroleum engineering
• Plastics engineering
• Process engineering
• Quality engineering (quality assurance engineering)
• Reliability engineering
• Safety engineering
• Security engineering
• Sewage engineering
• Structural engineering
• Systems engineering (systems design engineering)
• Traffic engineering
• Transportation engineering (transport engineering)
• Vacuum engineering
• Value engineering
• Aquatic and environmental engineering
• Aerospace engineering
• Agricultural engineering
• Architectural engineering
• Audio engineering
• Automotive engineering (automotive systems engineering)
• Behavioral engineering
• Biological engineering
• Biomedical engineering
• Biomaterials engineering
• Bioresource engineering
• Ceramic engineering
• Chemical engineering
• Civil engineering
• Coastal engineering
• Combat engineering
• Communications system engineering
• Construction engineering
• Control engineering (control systems engineering)
• Ecological engineering
• Electrical engineering
• Electronics engineering (includes microelectronics engineering, microelectronics and semiconductor engineering)
• Electromechanical engineering
• Engineering science and mechanics
• Engineering physics (engineering science)
• Environmental engineering
• Computational finance (financial engineering)
• Fire protection engineering
• Food process engineering
• Forensic engineering
• Forest engineering
• Genetic engineering
• Geomatics engineering
• Geotechnical engineering
• Industrial engineering (includes production engineering)
• Information engineering
• Instrumentation engineering
• Integrated engineering
• Industrial engineering (includes manufacturing engineering)
• Landscape engineering
• Marine engineering
• Materials engineering (includes metallurgical engineering)
• Mechanical engineering
• Mechatronics
• Microsystems engineering
• Military engineering
• Minerals process engineering
• Mineral engineering
• Mining engineering
• Nanoengineering
• Neural engineering
• Nuclear engineering
• Optical engineering
• Ocean engineering
• Paper engineering
• Photovoltaics engineering
• Petroleum engineering
• Plastics engineering
• Process engineering
• Quality engineering (quality assurance engineering)
• Reliability engineering
• Safety engineering
• Security engineering
• Sewage engineering
• Structural engineering
• Systems engineering (systems design engineering)
• Traffic engineering
• Transportation engineering (transport engineering)
• Vacuum engineering
• Value engineering
12. Service tax credit
12.1
Consulting engineers avails many input services in the course of providing consulting services to their client. A few examples are Advertising Services, Banking and Other Financial Services, Business Support Services, Chartered Accountants Services, Courier Services, Facsimile Services, Telephone Services and a lot other services which are taxed. The Consulting engineers has to bear the incident if service tax charged on these input services.
The Cenvat Credit Rules, 2004 provides that Consulting engineers can take credit of the service tax paid on input services and setoff the same on payment of service tax on output service namely Consulting Engineers Service
12.2
in case Consulting engineers is providing services other than Consulting engineers which are not taxed and seperate accounts are not maintained for taxable service and exempted service, then he can avail Cenvat credit only up to 20% of his tax liability.
12.3
Similarly, a manufacturer or a service provider can take credit of the service tax paid on Consulting engineers services and adjust same against his excise duty/ service tax liability.
Consulting engineers avails many input services in the course of providing consulting services to their client. A few examples are Advertising Services, Banking and Other Financial Services, Business Support Services, Chartered Accountants Services, Courier Services, Facsimile Services, Telephone Services and a lot other services which are taxed. The Consulting engineers has to bear the incident if service tax charged on these input services.
The Cenvat Credit Rules, 2004 provides that Consulting engineers can take credit of the service tax paid on input services and setoff the same on payment of service tax on output service namely Consulting Engineers Service
12.2
in case Consulting engineers is providing services other than Consulting engineers which are not taxed and seperate accounts are not maintained for taxable service and exempted service, then he can avail Cenvat credit only up to 20% of his tax liability.
12.3
Similarly, a manufacturer or a service provider can take credit of the service tax paid on Consulting engineers services and adjust same against his excise duty/ service tax liability.
11. Some of the other services which are not within the mischief of consulting engineer service
11.1
Services in relation to research and development activity
In case of CCE v. MRF Ltd. (Chennai), it was held by the Tribunal that the services provided by the foreign company to the respondent were for its research and development activity with regard to automotive tyres, and were, therefore, in the nature of scientific and technical consultancy service and not the consulting engineer service.
‘Scientific and technical consultancy services’ has been introduced as a new service for purpose of levy of service tax with effect from 16-7-2001.
11.2
Annual maintenance contract services
In case of Roots Multiclean Ltd. v. CCE, the appellant, manufacturer of floor cleaning machines, used to offer warranty period of one year, beyond which they used to enter into Annual Maintenance Contracts (AMC) with their buyers for repair and maintenance of machines sold. The tribunal held that, ‘engineering consultancy service’ is an intangible service. But the service rendered by the appellants during the period of dispute was a tangible service, in as much as they were physically repairing or maintaining the machines, which could be hardly 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’.
The activity became taxable service only with effect from 1-7-2003 when separate entry was included.
11.3
Planning of building, preparation of land map, property valuation
In case of CCE v. Rabindra Dass, assessee, the tribunal has held that the functions performed by a civil engineer i.e. planning of building, preparation of land map, preparation of ground plan of factory, stability certificate, installed capacity assessment and property valuation fall within the purview of the term ‘consulting engineer’.
The above view has been upheld by the High Court of Madras in the matter of Shanmugavel v. CCE. Chennai 2001 (131) ELT 14 (Mad.) wherein it was held that valuers of plant and machinery being professionally qualified engineers, be regarded as ‘consulting engineers’ and services rendered by them are liable to service tax”.
11.4
Manpower supply services
In case of SPIC-SMO Ltd. v. CCE, the tribunal has held that the appellant was only supplying manpower in view of the surplus technical manpower which the appellant had therefore, the finding that the appellant was rendering consulting engineer service was not sustainable and no service tax was to be demanded.
The above service will now be covered by the Manpower recruitment or supply agency services with effect from 16-06-2005.
Services in relation to research and development activity
In case of CCE v. MRF Ltd. (Chennai), it was held by the Tribunal that the services provided by the foreign company to the respondent were for its research and development activity with regard to automotive tyres, and were, therefore, in the nature of scientific and technical consultancy service and not the consulting engineer service.
‘Scientific and technical consultancy services’ has been introduced as a new service for purpose of levy of service tax with effect from 16-7-2001.
11.2
Annual maintenance contract services
In case of Roots Multiclean Ltd. v. CCE, the appellant, manufacturer of floor cleaning machines, used to offer warranty period of one year, beyond which they used to enter into Annual Maintenance Contracts (AMC) with their buyers for repair and maintenance of machines sold. The tribunal held that, ‘engineering consultancy service’ is an intangible service. But the service rendered by the appellants during the period of dispute was a tangible service, in as much as they were physically repairing or maintaining the machines, which could be hardly 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’.
The activity became taxable service only with effect from 1-7-2003 when separate entry was included.
11.3
Planning of building, preparation of land map, property valuation
In case of CCE v. Rabindra Dass, assessee, the tribunal has held that the functions performed by a civil engineer i.e. planning of building, preparation of land map, preparation of ground plan of factory, stability certificate, installed capacity assessment and property valuation fall within the purview of the term ‘consulting engineer’.
The above view has been upheld by the High Court of Madras in the matter of Shanmugavel v. CCE. Chennai 2001 (131) ELT 14 (Mad.) wherein it was held that valuers of plant and machinery being professionally qualified engineers, be regarded as ‘consulting engineers’ and services rendered by them are liable to service tax”.
11.4
Manpower supply services
In case of SPIC-SMO Ltd. v. CCE, the tribunal has held that the appellant was only supplying manpower in view of the surplus technical manpower which the appellant had therefore, the finding that the appellant was rendering consulting engineer service was not sustainable and no service tax was to be demanded.
The above service will now be covered by the Manpower recruitment or supply agency services with effect from 16-06-2005.
10. Valuation
10.1
The value of any taxable service is determined as per the provisions of the Service Tax (Determination of Value) Rules, 2006 [‘the Valuation Rules’].
10.2
As per Rule 3 of the Valuation Rules, the value of taxable service, where the consideration received is not wholly or partly consisting of money, is determined by the service provider in the following manner :-
(a) the value of such taxable service is equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration;
(b) where the value cannot be determined in accordance with clause (a), the service provider is required to determine the equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable service.
10.3
Further, as per Rule 5(1) of the Valuation Rules, where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs are includable in the value for the purpose of charging service tax on the said service.
10.4
However, as per Rule 5(2) of the Valuation Rules, the expenditure or costs incurred by the service provider as a pure agent of the recipient of service, are excluded from the value of the taxable service if all the following conditions are satisfied,
(i) the service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods or services procured;
(ii) the recipient of service receives and uses the goods or services so procured by the service provider in his capacity as pure agent of the recipient of service;
(iii) the recipient of service is liable to make payment to the third party;
(iv) the recipient of service authorises the service provider to make payment on his behalf;
(v) the recipient of service knows that the goods and services for which payment has been made by the service provider shall be provided by the third party;
(vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service;
(vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and
(viii) the goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account.
10.3
At times, an engineering firm will be providing both engineering services and architectural services and a lump sum amount is charged for both the services. In Trade Notice No. 1/98-ST, dated 5-1-1998, it has been clarified that in such cases, service tax will have to be collected on the entire amount charged. However, if separate break-up is given in the bill for engineering services and architectural services, then service tax needs to be paid only on the charges for engineering services.
The value of any taxable service is determined as per the provisions of the Service Tax (Determination of Value) Rules, 2006 [‘the Valuation Rules’].
10.2
As per Rule 3 of the Valuation Rules, the value of taxable service, where the consideration received is not wholly or partly consisting of money, is determined by the service provider in the following manner :-
(a) the value of such taxable service is equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration;
(b) where the value cannot be determined in accordance with clause (a), the service provider is required to determine the equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable service.
10.3
Further, as per Rule 5(1) of the Valuation Rules, where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs are includable in the value for the purpose of charging service tax on the said service.
10.4
However, as per Rule 5(2) of the Valuation Rules, the expenditure or costs incurred by the service provider as a pure agent of the recipient of service, are excluded from the value of the taxable service if all the following conditions are satisfied,
(i) the service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods or services procured;
(ii) the recipient of service receives and uses the goods or services so procured by the service provider in his capacity as pure agent of the recipient of service;
(iii) the recipient of service is liable to make payment to the third party;
(iv) the recipient of service authorises the service provider to make payment on his behalf;
(v) the recipient of service knows that the goods and services for which payment has been made by the service provider shall be provided by the third party;
(vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service;
(vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and
(viii) the goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account.
10.3
At times, an engineering firm will be providing both engineering services and architectural services and a lump sum amount is charged for both the services. In Trade Notice No. 1/98-ST, dated 5-1-1998, it has been clarified that in such cases, service tax will have to be collected on the entire amount charged. However, if separate break-up is given in the bill for engineering services and architectural services, then service tax needs to be paid only on the charges for engineering services.
9. Classification of Service
Presently 105 services are within the service tax ambit and every year new services are brought under the service tax net. There are many services which are overlapping in nature and it is possible that one particular service can be classified under more than one category
9.1
Following are a few services which compete with Consulting engineers Service:
· Architect’s Service
· Construction service
· Erection, commissioning or installation service
· Insurance auxiliary service
· Intellectual property service
· Interior decorators service
· Scientific or technical consultancy service
· Survey and exploration of minerals service
· Survey and map making service
· Technical inspection and certification service
· Technical testing and analysis service
9.2
As per section 65A(2) of the Finance Act, where, a taxable service is, prima facie, classifiable under two or more categories, classification should be effected as in the following manner:-
(a) Category of service which provides the most specific description should be preferred to general description;
(b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), should be classified as if they consisted of a service which gives them their essential character,
(c) when a service cannot be classified in the manner specified above, it should be classified under the category which occurs first among the categories which equally merit consideration.
9.3
A consulting engineer may also provide architect service while providing services exigible to ‘consulting engineer service’. In such case, whether architect service is taxable in the hands of consulting engineers. As aforesaid, the Board has clarified that architect service does not fall within the ambit of ‘consulting engineer service’. Therefore, it has to be seen whether architect service provided by consulting engineer is exigible to ‘architect service’. As per section 65(6) of the Finance Act, an ‘architect’ means a person whose name is entered in the register of architects maintained under section 23 of the Architects Act, 1972. Hence, if the consulting engineer is not registered as architect, his architect service cannot be taxed under ‘‘architect service’ also.
9.1
Following are a few services which compete with Consulting engineers Service:
· Architect’s Service
· Construction service
· Erection, commissioning or installation service
· Insurance auxiliary service
· Intellectual property service
· Interior decorators service
· Scientific or technical consultancy service
· Survey and exploration of minerals service
· Survey and map making service
· Technical inspection and certification service
· Technical testing and analysis service
9.2
As per section 65A(2) of the Finance Act, where, a taxable service is, prima facie, classifiable under two or more categories, classification should be effected as in the following manner:-
(a) Category of service which provides the most specific description should be preferred to general description;
(b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), should be classified as if they consisted of a service which gives them their essential character,
(c) when a service cannot be classified in the manner specified above, it should be classified under the category which occurs first among the categories which equally merit consideration.
9.3
A consulting engineer may also provide architect service while providing services exigible to ‘consulting engineer service’. In such case, whether architect service is taxable in the hands of consulting engineers. As aforesaid, the Board has clarified that architect service does not fall within the ambit of ‘consulting engineer service’. Therefore, it has to be seen whether architect service provided by consulting engineer is exigible to ‘architect service’. As per section 65(6) of the Finance Act, an ‘architect’ means a person whose name is entered in the register of architects maintained under section 23 of the Architects Act, 1972. Hence, if the consulting engineer is not registered as architect, his architect service cannot be taxed under ‘‘architect service’ also.
8. Who is liable to pay service tax?
8.1
In most of the cases, service provider, i.e., person who is providing taxable service is liable to pay service tax and, hence, the consulting engineer or firm or body corporate providing services is liable for service tax. However, in few cases, exceptions have been made and the service receiver is made to liable to pay service tax. By Finance Act, 1999 it has been provided that if a person providing service is non-resident and does not have address or place of business in India, service tax is payable by person receiving taxable service in India [Rule 2(1)(d)(iv)]. The amendment has come in effect from 11 May 1999. In such a case, person receiving the service will also have to register.
8.2
If a person pays service tax, which he was not liable to pay in the first place, he is entitled for a refund provided refund claim has been filed within the prescribed time[1].
[1] CCE vs Ambuja Cement Eastern Ltd;
In most of the cases, service provider, i.e., person who is providing taxable service is liable to pay service tax and, hence, the consulting engineer or firm or body corporate providing services is liable for service tax. However, in few cases, exceptions have been made and the service receiver is made to liable to pay service tax. By Finance Act, 1999 it has been provided that if a person providing service is non-resident and does not have address or place of business in India, service tax is payable by person receiving taxable service in India [Rule 2(1)(d)(iv)]. The amendment has come in effect from 11 May 1999. In such a case, person receiving the service will also have to register.
8.2
If a person pays service tax, which he was not liable to pay in the first place, he is entitled for a refund provided refund claim has been filed within the prescribed time[1].
[1] CCE vs Ambuja Cement Eastern Ltd;
7. Services must be to a client - two parties
In relation to consulting engineer, the word used is client. In the case of Rolls Royce Industries Power (I) Ltd. v. CCE, the appellant entered into an operation and maintenance agreement with the owner of a power station. The terms of the contract vested complete freedom and responsibility on the appellant, without any interference by the owner. The owner’s right was restricted to entry and access, to be satisfied that the operation was carried out according to standards. He also received reports about the relevant aspects of operation, status and output. The payment for operation and maintenance was determined under the various clauses of the contract. In addition to the lump sum payment, it also provided for bonus and penalty. The terms of the contract did not envisage or involve providing any consulting or engineering help to the owner. The operator was fully autonomous and responsible for the performance of operation and maintenance. Whatever engineering issues were involved, it was for the operator to find solutions for, and attend to in the course of operation and maintenance. He was not required to render any advice or to take any orders from the owner. He could not pass on the responsibility for operating the plant in any manner to the owner. So on the basis of these facts, the Tribunal held that there were no two parties, one giving advice and the other accepting it. Service tax is attracted only in a case involving rendering of service. That situation did not take place in the instant case. So in case of pure contract of works/hire etc., service tax is not payable.
6. Services may be provided either directly or indirectly
6.1
The word ‘indirectly’ is indicative of the fact that even indirect advice, consultancy or technical assistance in one or more disciplines of engineering is covered. There may be cases where a consulting engineer does not provide engineering services to a client directly but in the capacity of a sub-consultant, etc., to another consulting engineer who is prime consultant. In this regard, the Government vide Circular F.No. B. 43/5/97 TRU, dated 2-7-1997 has clarified that the services should be rendered to a client directly, and not in the capacity of a sub-consultant/associate consultant to another consulting engineer, who is the prime consultant. When services are rendered to the prime consultant, the levy of service tax does not fall on the sub-consultant but is on the prime or main consulting engineer who raises a bill on his client (which would include the charge for services rendered by the sub-consultant).
6.2
A service rendered indirectly will be liable to tax, if the prime contractor fails to discharge his service tax liability or is not exigible to service tax. In a work contract, the contractor, a consulting firm, may seek opinions from other consulting engineers. As the work contracts are not exigible to tax under consulting engineer service, the consulting engineer providing opinion will be liable to pay service tax.
6.3
In the case of L&T-Sargent & Lundy Ltd. v. CCE [Mumbai Bench], the appellant provided engineering services to M/s. Larsen & Toubro Limited and paid the service tax and also included the same in the bills raised on M/s. Larsen & Toubro Limited. They later realised that M/s. Larsen & Toubro Limited being consulting engineers themselves were liable to pay the service tax on the services rendered by them to the customers. On that ground, they filed a refund claim of the tax already paid. The Dy. Commissioner accepted the contention and directed refund to be paid. This order was reviewed by the jurisdictional Commissioner in terms of section 84 of the Finance Act, 1994. But the Tribunal allowed the same.
6.4
In the case of Nokia India P Ltd. Vs CCE (2006) 1 STR 233(Del), the tribunal has revealed a different dimension of the term ‘directly or indirectly’ by deciding that the expression consultant engineer encompasses direct or indirect rendering of such service including technical assistance and this includes the training of personnel, software support, operation and maintenance services, emergency support services, technical consultancy etc.
The word ‘indirectly’ is indicative of the fact that even indirect advice, consultancy or technical assistance in one or more disciplines of engineering is covered. There may be cases where a consulting engineer does not provide engineering services to a client directly but in the capacity of a sub-consultant, etc., to another consulting engineer who is prime consultant. In this regard, the Government vide Circular F.No. B. 43/5/97 TRU, dated 2-7-1997 has clarified that the services should be rendered to a client directly, and not in the capacity of a sub-consultant/associate consultant to another consulting engineer, who is the prime consultant. When services are rendered to the prime consultant, the levy of service tax does not fall on the sub-consultant but is on the prime or main consulting engineer who raises a bill on his client (which would include the charge for services rendered by the sub-consultant).
6.2
A service rendered indirectly will be liable to tax, if the prime contractor fails to discharge his service tax liability or is not exigible to service tax. In a work contract, the contractor, a consulting firm, may seek opinions from other consulting engineers. As the work contracts are not exigible to tax under consulting engineer service, the consulting engineer providing opinion will be liable to pay service tax.
6.3
In the case of L&T-Sargent & Lundy Ltd. v. CCE [Mumbai Bench], the appellant provided engineering services to M/s. Larsen & Toubro Limited and paid the service tax and also included the same in the bills raised on M/s. Larsen & Toubro Limited. They later realised that M/s. Larsen & Toubro Limited being consulting engineers themselves were liable to pay the service tax on the services rendered by them to the customers. On that ground, they filed a refund claim of the tax already paid. The Dy. Commissioner accepted the contention and directed refund to be paid. This order was reviewed by the jurisdictional Commissioner in terms of section 84 of the Finance Act, 1994. But the Tribunal allowed the same.
6.4
In the case of Nokia India P Ltd. Vs CCE (2006) 1 STR 233(Del), the tribunal has revealed a different dimension of the term ‘directly or indirectly’ by deciding that the expression consultant engineer encompasses direct or indirect rendering of such service including technical assistance and this includes the training of personnel, software support, operation and maintenance services, emergency support services, technical consultancy etc.
5. Service should pertain to one or more disciplines of engineering
5.1
Engineering is the application of scientific or mathematical principles to develop economical solutions to technical problems, creating products, facilities, and structures that are useful to people. Engineers use imagination, judgment, and reasoning to apply science, technology, mathematics, and practical experience. The result is the design, production, and operation of useful objects or processes. The broad discipline of engineering encompasses a range of specialized sub-disciplines that focus on the issues associated with developing a specific kind of product, or using a specific type of technology. A comprehensive list of various disciplines of engineering is given at the end of paper.
5.2
A service provided by a consulting engineer should pertain to one or more disciplines of engineering to be exigible to service tax under the consulting engineer service. To burden a consulting engineer with service tax, it should be shown that the so called advice, consultancy or technical assistance pertains to one or more discipline of science. An advice, consultancy or technical assistance pertaining to finance, law or management given by a consulting engineer to a client is not exigible to tax under the consulting engineer service.
5.3
The scope of the services of a consultant may include any one or more of the following categories :—
(i) Feasibility report;
(ii) Pre-design services project report;
(iii) Basic design engineering;
(iv) Detailed design engineering;
(v) Procurement;
(vi) Supervision and project management;
(vii) Supervision of commissioning and initial operation;
(viii) Manpower planning and training;
(ix) Post-operation and management;
(x) Trouble shooting and technical services, including establishing systems and procedures for an existing plant.
Though the above list is not exhaustive, it reveals the wide scope and nature of the services which may be rendered by a consulting engineer.
5.4
A service provided by a consulting engineer which does not necessarily involves his expertise in one or more discipline of science is also not covered under the category of consulting engineer service. In order to be taxed under this category, it is required that that particular service can be provided by an engineer alone and no one else. If same service can be provided by a Chartered Accountant or a Cost Accountant or a Lawyer or a Management Consultant, then also it cannot be taxed under the category of Consulting Engineer Service .
Chartered Accountant, Cost Accountant, Actuary, or a person holding diploma in relation to insurance can provide services as surveyors or loss assessor . Therefore, insurance surveyor and loss assessors are not categorized as Consulting Engineer Service but under a different category i.e. ‘Insurance Auxiliary Services’
`Architecture’ and `engineering’ are two separate disciplines of technical education and these are two separate professions. Hence service of architect can not be taxed under Consulting Engineer Service. They are taxed under Architect Service’ or ‘Interior Designer Service’.
Engineering is the application of scientific or mathematical principles to develop economical solutions to technical problems, creating products, facilities, and structures that are useful to people. Engineers use imagination, judgment, and reasoning to apply science, technology, mathematics, and practical experience. The result is the design, production, and operation of useful objects or processes. The broad discipline of engineering encompasses a range of specialized sub-disciplines that focus on the issues associated with developing a specific kind of product, or using a specific type of technology. A comprehensive list of various disciplines of engineering is given at the end of paper.
5.2
A service provided by a consulting engineer should pertain to one or more disciplines of engineering to be exigible to service tax under the consulting engineer service. To burden a consulting engineer with service tax, it should be shown that the so called advice, consultancy or technical assistance pertains to one or more discipline of science. An advice, consultancy or technical assistance pertaining to finance, law or management given by a consulting engineer to a client is not exigible to tax under the consulting engineer service.
5.3
The scope of the services of a consultant may include any one or more of the following categories :—
(i) Feasibility report;
(ii) Pre-design services project report;
(iii) Basic design engineering;
(iv) Detailed design engineering;
(v) Procurement;
(vi) Supervision and project management;
(vii) Supervision of commissioning and initial operation;
(viii) Manpower planning and training;
(ix) Post-operation and management;
(x) Trouble shooting and technical services, including establishing systems and procedures for an existing plant.
Though the above list is not exhaustive, it reveals the wide scope and nature of the services which may be rendered by a consulting engineer.
5.4
A service provided by a consulting engineer which does not necessarily involves his expertise in one or more discipline of science is also not covered under the category of consulting engineer service. In order to be taxed under this category, it is required that that particular service can be provided by an engineer alone and no one else. If same service can be provided by a Chartered Accountant or a Cost Accountant or a Lawyer or a Management Consultant, then also it cannot be taxed under the category of Consulting Engineer Service .
Chartered Accountant, Cost Accountant, Actuary, or a person holding diploma in relation to insurance can provide services as surveyors or loss assessor . Therefore, insurance surveyor and loss assessors are not categorized as Consulting Engineer Service but under a different category i.e. ‘Insurance Auxiliary Services’
`Architecture’ and `engineering’ are two separate disciplines of technical education and these are two separate professions. Hence service of architect can not be taxed under Consulting Engineer Service. They are taxed under Architect Service’ or ‘Interior Designer Service’.
5 Service should pertain to one or more disciplines of engineering
5.1
Engineering is the application of scientific or mathematical principles to develop economical solutions to technical problems, creating products, facilities, and structures that are useful to people. Engineers use imagination, judgment, and reasoning to apply science, technology, mathematics, and practical experience. The result is the design, production, and operation of useful objects or processes. The broad discipline of engineering encompasses a range of specialized sub-disciplines that focus on the issues associated with developing a specific kind of product, or using a specific type of technology. A comprehensive list of various disciplines of engineering is given at the end of paper.
5.2
A service provided by a consulting engineer should pertain to one or more disciplines of engineering to be exigible to service tax under the consulting engineer service. To burden a consulting engineer with service tax, it should be shown that the so called advice, consultancy or technical assistance pertains to one or more discipline of science. An advice, consultancy or technical assistance pertaining to finance, law or management given by a consulting engineer to a client is not exigible to tax under the consulting engineer service.
5.3
The scope of the services of a consultant may include any one or more of the following categories :—
(i) Feasibility report;
(ii) Pre-design services project report;
(iii) Basic design engineering;
(iv) Detailed design engineering;
(v) Procurement;
(vi) Supervision and project management;
(vii) Supervision of commissioning and initial operation;
(viii) Manpower planning and training;
(ix) Post-operation and management;
(x) Trouble shooting and technical services, including establishing systems and procedures for an existing plant.
Though the above list is not exhaustive, it reveals the wide scope and nature of the services which may be rendered by a consulting engineer.
5.4
A service provided by a consulting engineer which does not necessarily involves his expertise in one or more discipline of science is also not covered under the category of consulting engineer service. In order to be taxed under this category, it is required that that particular service can be provided by an engineer alone and no one else. If same service can be provided by a Chartered Accountant or a Cost Accountant or a Lawyer or a Management Consultant, then also it cannot be taxed under the category of Consulting Engineer Service .
Chartered Accountant, Cost Accountant, Actuary, or a person holding diploma in relation to insurance can provide services as surveyors or loss assessor . Therefore, insurance surveyor and loss assessors are not categorized as Consulting Engineer Service but under a different category i.e. ‘Insurance Auxiliary Services’
`Architecture’ and `engineering’ are two separate disciplines of technical education and these are two separate professions. Hence service of architect can not be taxed under Consulting Engineer Service. They are taxed under Architect Service’ or ‘Interior Designer Service’.
Engineering is the application of scientific or mathematical principles to develop economical solutions to technical problems, creating products, facilities, and structures that are useful to people. Engineers use imagination, judgment, and reasoning to apply science, technology, mathematics, and practical experience. The result is the design, production, and operation of useful objects or processes. The broad discipline of engineering encompasses a range of specialized sub-disciplines that focus on the issues associated with developing a specific kind of product, or using a specific type of technology. A comprehensive list of various disciplines of engineering is given at the end of paper.
5.2
A service provided by a consulting engineer should pertain to one or more disciplines of engineering to be exigible to service tax under the consulting engineer service. To burden a consulting engineer with service tax, it should be shown that the so called advice, consultancy or technical assistance pertains to one or more discipline of science. An advice, consultancy or technical assistance pertaining to finance, law or management given by a consulting engineer to a client is not exigible to tax under the consulting engineer service.
5.3
The scope of the services of a consultant may include any one or more of the following categories :—
(i) Feasibility report;
(ii) Pre-design services project report;
(iii) Basic design engineering;
(iv) Detailed design engineering;
(v) Procurement;
(vi) Supervision and project management;
(vii) Supervision of commissioning and initial operation;
(viii) Manpower planning and training;
(ix) Post-operation and management;
(x) Trouble shooting and technical services, including establishing systems and procedures for an existing plant.
Though the above list is not exhaustive, it reveals the wide scope and nature of the services which may be rendered by a consulting engineer.
5.4
A service provided by a consulting engineer which does not necessarily involves his expertise in one or more discipline of science is also not covered under the category of consulting engineer service. In order to be taxed under this category, it is required that that particular service can be provided by an engineer alone and no one else. If same service can be provided by a Chartered Accountant or a Cost Accountant or a Lawyer or a Management Consultant, then also it cannot be taxed under the category of Consulting Engineer Service .
Chartered Accountant, Cost Accountant, Actuary, or a person holding diploma in relation to insurance can provide services as surveyors or loss assessor . Therefore, insurance surveyor and loss assessors are not categorized as Consulting Engineer Service but under a different category i.e. ‘Insurance Auxiliary Services’
`Architecture’ and `engineering’ are two separate disciplines of technical education and these are two separate professions. Hence service of architect can not be taxed under Consulting Engineer Service. They are taxed under Architect Service’ or ‘Interior Designer Service’.
4. Service must be in relation to advice, consultancy or technical assistance in any manner
To understand the scope of the service the terms ‘advice’, ‘consultancy’ and ‘technical assistance’ need to be analysed
4.1
‘Advice’
In terms of Oxford Dictionary, advice means guidance or recommendations offered with regard to future action, 2 a formal notice of a sale or other transaction.
In terms of Black’s dictionary, advice means a guidance offered by one person to another, esp. a lawyer, to another.
In terms of Law Lexicon by Ramanatha Aiyar, advice means counsel given or an opinion expressed as to the wisdom of future conduct.
In terms of Cambridge dictionary, advice means an opinion which someone offers you about what you should do or how you should act in a particular situation
In view of the above definition, it can be said that advice means a communication to a client in the form of a guidance, recommendation, opinion or counsel. An advice is optional in nature. It is upto the client to accept the advice or not.
4.2
‘Consultancy’
In terms of Oxford Dictionary, consultancy means a professional practice giving expert advice in a particular field.
In terms of Black’s Law dictionary, consultation means the act of asking the advice or opinion of someone (such as a lawyer).
In terms of Cambridge dictionary, consultancy means to give specialist advice on a particular subject.
In terms of Law Lexicon, by Ramanatha Aiyar, consultant is an expression apparently meaning that the person consulted is to give to the company the benefit of his knowledge and experience.
In terms of Wikipedia, a consultant is professional who provides expert advice in a particular area of expertise such as accountancy, the environment, technology, the law, human resources, marketing, medicine, finance, public affairs, communication, engineering or waste management.
The main difference between a consultant and a 'normal' expert is that the consultant is not himself employed with his client, but instead is in business for himself or for a consultancy firm, usually with multiple and changing clients. Thus, his clients have access to deeper levels of expertise than would be feasible for them to retain in-house, especially if the speciality is needed comparatively rarely.
4.3
‘Technical assistance’
In terms of Oxford Dictionary and Cambridge dictionary, assistance means help or support.
An assistance is normally for the purpose of achieving a particular aim or result.
Therefore, technical assistance means a help or support given to a client which is technical in nature. Technical help is intangible involving technical expertise of the service provider with an intent to solve a problem.
4.4
In view of the above definitions of advice, consultancy and technical assistance, it transpires that, these are intangibles, which are expressed orally or in writing by the consulting engineer by applying the knowledge of science which has been acquired by him in the course of education imparted by a recognized university and practice in the field of engineering. Further, advice, consultancy and technical assistance are to provide solutions to problems, which benefit the client by increasing his efficiency and productivity.
4.5
If a consulting engineer undertakes a contract of work of erection and commissioning of a project/plant, it can not be considered as a mere advice, consultancy or technical assistance given to the client. Even though, consulting engineer has to use his engineering expertise, he uses that expertise to perform the task, and therefore, such work contract is beyond the ambit of taxable service . Further, a work contract cannot be vivisected and a part of it subjected to tax. Central Board of Excise and Customs (‘the Board’ or ‘CBEC’) has also clarified that charges for erection, installation and commissioning are not covered under the category of consulting engineer services . These are taxed under ‘Erection, Commissioning or Installation Service.
On the other hand, if the erection and commissioning work is done by a third party and consulting engineer is required to supervise the work independently and provide solution to the various problems, he will fall within the ambit of taxable service.
4.6
Royalty payment for use of technology and know-how is neither an advice nor a consultancy or technical assistance to a client. It is understood as a share of product or profit reserved by owner for permitting another the use of his property. Royalty payments are in the nature of license fees for the use of the intellectual property right and could not be treated as value of services under consulting engineering service; therefore these payments are not exigible to service tax under the category of consulting engineer service. These are taxed under “Intellectual Property Services”.
4.7
Certification and Testing vis-à-vis advice, consultancy and assistance
Certificate is an official document recording a particular fact, event, or level of achievement. It is a mere evaluation of the present working without any suggestion as to what manner problems can be solved. Therefore, certification work is not within the ambit of service tax under consulting engineer service. Board has clarified that certificates given under authority of any statute/international protocol/code/convention cannot be considered to be a consultancy job. Since advice is generally understood to be optional in nature and has no statutory force. It is up to the client to accept the advice or not. The activity of certification will, therefore, not fall under the category of advice. With regard to ‘technical assistance’, a certificate given is not of any ‘assistance’ to the person using the certificate. Hence, the survey/inspection done in pursuance thereof for the purpose under an authority of law, will also not amount to consultancy advice or technical assistance . These are taxed under ‘Technical Inspection and Certification Service’.
4.8
Similarly, testing of goods is also a mere evaluation of present strength and weakness of the product, therefore, falls outside the ambit of service tax under consulting engineer service . These are taxed under ‘Technical Testing and Analysis Service’.
4.1
‘Advice’
In terms of Oxford Dictionary, advice means guidance or recommendations offered with regard to future action, 2 a formal notice of a sale or other transaction.
In terms of Black’s dictionary, advice means a guidance offered by one person to another, esp. a lawyer, to another.
In terms of Law Lexicon by Ramanatha Aiyar, advice means counsel given or an opinion expressed as to the wisdom of future conduct.
In terms of Cambridge dictionary, advice means an opinion which someone offers you about what you should do or how you should act in a particular situation
In view of the above definition, it can be said that advice means a communication to a client in the form of a guidance, recommendation, opinion or counsel. An advice is optional in nature. It is upto the client to accept the advice or not.
4.2
‘Consultancy’
In terms of Oxford Dictionary, consultancy means a professional practice giving expert advice in a particular field.
In terms of Black’s Law dictionary, consultation means the act of asking the advice or opinion of someone (such as a lawyer).
In terms of Cambridge dictionary, consultancy means to give specialist advice on a particular subject.
In terms of Law Lexicon, by Ramanatha Aiyar, consultant is an expression apparently meaning that the person consulted is to give to the company the benefit of his knowledge and experience.
In terms of Wikipedia, a consultant is professional who provides expert advice in a particular area of expertise such as accountancy, the environment, technology, the law, human resources, marketing, medicine, finance, public affairs, communication, engineering or waste management.
The main difference between a consultant and a 'normal' expert is that the consultant is not himself employed with his client, but instead is in business for himself or for a consultancy firm, usually with multiple and changing clients. Thus, his clients have access to deeper levels of expertise than would be feasible for them to retain in-house, especially if the speciality is needed comparatively rarely.
4.3
‘Technical assistance’
In terms of Oxford Dictionary and Cambridge dictionary, assistance means help or support.
An assistance is normally for the purpose of achieving a particular aim or result.
Therefore, technical assistance means a help or support given to a client which is technical in nature. Technical help is intangible involving technical expertise of the service provider with an intent to solve a problem.
4.4
In view of the above definitions of advice, consultancy and technical assistance, it transpires that, these are intangibles, which are expressed orally or in writing by the consulting engineer by applying the knowledge of science which has been acquired by him in the course of education imparted by a recognized university and practice in the field of engineering. Further, advice, consultancy and technical assistance are to provide solutions to problems, which benefit the client by increasing his efficiency and productivity.
4.5
If a consulting engineer undertakes a contract of work of erection and commissioning of a project/plant, it can not be considered as a mere advice, consultancy or technical assistance given to the client. Even though, consulting engineer has to use his engineering expertise, he uses that expertise to perform the task, and therefore, such work contract is beyond the ambit of taxable service . Further, a work contract cannot be vivisected and a part of it subjected to tax. Central Board of Excise and Customs (‘the Board’ or ‘CBEC’) has also clarified that charges for erection, installation and commissioning are not covered under the category of consulting engineer services . These are taxed under ‘Erection, Commissioning or Installation Service.
On the other hand, if the erection and commissioning work is done by a third party and consulting engineer is required to supervise the work independently and provide solution to the various problems, he will fall within the ambit of taxable service.
4.6
Royalty payment for use of technology and know-how is neither an advice nor a consultancy or technical assistance to a client. It is understood as a share of product or profit reserved by owner for permitting another the use of his property. Royalty payments are in the nature of license fees for the use of the intellectual property right and could not be treated as value of services under consulting engineering service; therefore these payments are not exigible to service tax under the category of consulting engineer service. These are taxed under “Intellectual Property Services”.
4.7
Certification and Testing vis-à-vis advice, consultancy and assistance
Certificate is an official document recording a particular fact, event, or level of achievement. It is a mere evaluation of the present working without any suggestion as to what manner problems can be solved. Therefore, certification work is not within the ambit of service tax under consulting engineer service. Board has clarified that certificates given under authority of any statute/international protocol/code/convention cannot be considered to be a consultancy job. Since advice is generally understood to be optional in nature and has no statutory force. It is up to the client to accept the advice or not. The activity of certification will, therefore, not fall under the category of advice. With regard to ‘technical assistance’, a certificate given is not of any ‘assistance’ to the person using the certificate. Hence, the survey/inspection done in pursuance thereof for the purpose under an authority of law, will also not amount to consultancy advice or technical assistance . These are taxed under ‘Technical Inspection and Certification Service’.
4.8
Similarly, testing of goods is also a mere evaluation of present strength and weakness of the product, therefore, falls outside the ambit of service tax under consulting engineer service . These are taxed under ‘Technical Testing and Analysis Service’.
Thursday, December 21, 2006
3. Services must be provided by any professionally qualified engineer or body corporate or any other firm
3.1
The term ‘professionally qualified engineer’ has not been defined in the Finance Act. A holder of degree of engineering or a diploma of engineering from a recognized university can be considered as professionally qualified engineer. However, a certificate holder from Industrial Training Institute can not be considered as a professionally qualified engineer[1]. A professionally qualified engineer may be self employed and may or may not employ others to assist him[2].
3.2
The definition of ‘consulting engineer’ includes ‘body corporate’ or ‘any other firm’. The term ‘body corporate’ and ‘any other firm’ are omnibus and will include all types of association of individuals whether incorporated or not.
3.3
Prior to amendment, consulting engineering service provided by an ‘engineering firm’ was subject to tax. The term ‘engineering firm’ was not defined in the Finance Act. Some doubts were expressed regarding the levy of service tax on corporate assessee. The issue is no longer res integra in view of various judgments wherein it has been held that the word ‘firm’ has wider meaning including any business concern and is not limited to partnership firm alone. Even a limited company will be covered within the ambit of firm[3]. Therefore, the service provider can be any person, i.e., individual, firm or company.
3.4
Further, prior to amendment, service provided by an ‘engineering firm’ was taxable. What constituted an ‘engineering firm’ was not defined in the Finance Act. The commercial understanding of an ‘engineering firm’ is a firm or an entity whose main business is to provide consultancy in one or more disciplines of engineering. If the firm or company is not known as ‘engineering firm’ it was not liable to pay service tax, even though it may have rendered engineering consultancy[4]. Further, in the case of CCE v. Jain Steel [2005 (2) STT 142 (New Delhi)], it was held that where a firm did not consist of any professionally qualified persons, it was not liable to pay service tax on services rendered by it. In case of Roots Industries Ltd. v. CCE [2005] 2 STT 30 (Chennai - CESTAT) also, it was held that as per the definitions of consulting engineer and ‘Engineering consultancy service’, such service should be rendered by a professionally qualified engineer.
3.5
The words engineering firm has been replaced with ‘any other body corporate or any other firm’ vide Finance Act, 2006. After amendment in the definition of the consulting engineer, it appears that a company or a firm who renders any advice, consultancy or technical assistance to a client in any disciplines of engineering will be covered within the taxable service, irrespective of the fact whether such company or firm is known as engineering firm or not. However, it is still a matter of dispute as to whether the company or firm should have professionally qualified engineers to be exigible to service tax under consulting engineer service.
[1] [2006 (2) S.T.R. 342 (Tri. - Bang.)]
[2] The Trade Notice No. 7/97-ST, dated 4-7-1997, Mumbai Commissionerate-I I
[3] [Nokia (I) Pvt Ltd Vs. Commissioner of Customs, 2006 (1) S.T.R. 233 (Tri. - Del.)] [Tata Consultancy Services Vs. UOI, 2001 (130) E.L.T. 726 (Kar.)] [M.N. Dastur & Company Ltd. Vs. UOI, 2002 (140) E.L.T. 341 (Cal.)], [Transweigh (India) Ltd. v. CCE [2004] 64 RLT 830 (CESTAT - Mum.)]
[4] [Pfizer Ltd. Vs. commissioner of Central Excise, 2005 (188) E.L.T. 456 (Tri. - Mumbai)], [Shakumbari Sugar & Allied Industries Ltd vs CCE],
The term ‘professionally qualified engineer’ has not been defined in the Finance Act. A holder of degree of engineering or a diploma of engineering from a recognized university can be considered as professionally qualified engineer. However, a certificate holder from Industrial Training Institute can not be considered as a professionally qualified engineer[1]. A professionally qualified engineer may be self employed and may or may not employ others to assist him[2].
3.2
The definition of ‘consulting engineer’ includes ‘body corporate’ or ‘any other firm’. The term ‘body corporate’ and ‘any other firm’ are omnibus and will include all types of association of individuals whether incorporated or not.
3.3
Prior to amendment, consulting engineering service provided by an ‘engineering firm’ was subject to tax. The term ‘engineering firm’ was not defined in the Finance Act. Some doubts were expressed regarding the levy of service tax on corporate assessee. The issue is no longer res integra in view of various judgments wherein it has been held that the word ‘firm’ has wider meaning including any business concern and is not limited to partnership firm alone. Even a limited company will be covered within the ambit of firm[3]. Therefore, the service provider can be any person, i.e., individual, firm or company.
3.4
Further, prior to amendment, service provided by an ‘engineering firm’ was taxable. What constituted an ‘engineering firm’ was not defined in the Finance Act. The commercial understanding of an ‘engineering firm’ is a firm or an entity whose main business is to provide consultancy in one or more disciplines of engineering. If the firm or company is not known as ‘engineering firm’ it was not liable to pay service tax, even though it may have rendered engineering consultancy[4]. Further, in the case of CCE v. Jain Steel [2005 (2) STT 142 (New Delhi)], it was held that where a firm did not consist of any professionally qualified persons, it was not liable to pay service tax on services rendered by it. In case of Roots Industries Ltd. v. CCE [2005] 2 STT 30 (Chennai - CESTAT) also, it was held that as per the definitions of consulting engineer and ‘Engineering consultancy service’, such service should be rendered by a professionally qualified engineer.
3.5
The words engineering firm has been replaced with ‘any other body corporate or any other firm’ vide Finance Act, 2006. After amendment in the definition of the consulting engineer, it appears that a company or a firm who renders any advice, consultancy or technical assistance to a client in any disciplines of engineering will be covered within the taxable service, irrespective of the fact whether such company or firm is known as engineering firm or not. However, it is still a matter of dispute as to whether the company or firm should have professionally qualified engineers to be exigible to service tax under consulting engineer service.
[1] [2006 (2) S.T.R. 342 (Tri. - Bang.)]
[2] The Trade Notice No. 7/97-ST, dated 4-7-1997, Mumbai Commissionerate-I I
[3] [Nokia (I) Pvt Ltd Vs. Commissioner of Customs, 2006 (1) S.T.R. 233 (Tri. - Del.)] [Tata Consultancy Services Vs. UOI, 2001 (130) E.L.T. 726 (Kar.)] [M.N. Dastur & Company Ltd. Vs. UOI, 2002 (140) E.L.T. 341 (Cal.)], [Transweigh (India) Ltd. v. CCE [2004] 64 RLT 830 (CESTAT - Mum.)]
[4] [Pfizer Ltd. Vs. commissioner of Central Excise, 2005 (188) E.L.T. 456 (Tri. - Mumbai)], [Shakumbari Sugar & Allied Industries Ltd vs CCE],
2. Key ingredients
• Services must be provided by any professionally qualified engineer or body corporate or any other firm
• Service must be in relation to advice, consultancy or technical assistance
• Advice, consultancy or technical assistance should pertain to one or more disciplines of engineering other than computer hardware and computer software engineering
• Services may be provided either directly or indirectly
• Services must be to a client - two parties
• Service must be in relation to advice, consultancy or technical assistance
• Advice, consultancy or technical assistance should pertain to one or more disciplines of engineering other than computer hardware and computer software engineering
• Services may be provided either directly or indirectly
• Services must be to a client - two parties
1. Meaning and Scope
1.1
Service tax on consulting engineer was levied with effect from 7-7-1997. As per section 65(105) (g) of the Finance Act, 1994 (‘the Finance Act’), Consulting Engineer Service means
“any service provided 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”
1.2
Further, as per section 65(31) of the Finance Act, consulting engineer means
“any professionally qualified engineer or any body corporate or any other 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”
Service tax on consulting engineer was levied with effect from 7-7-1997. As per section 65(105) (g) of the Finance Act, 1994 (‘the Finance Act’), Consulting Engineer Service means
“any service provided 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”
1.2
Further, as per section 65(31) of the Finance Act, consulting engineer means
“any professionally qualified engineer or any body corporate or any other 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”
Consulting Engineers
India is a developing country with a growth rate of about 7 to 9%. Service Industry is developing rapidly than manufacturing sector and growth rate in agricultural sector is the lowest.
To increase the tax base and tape new areas for revenue, Government of India has started imposing Service Tax on designated services since 1994. Initially, a few services were taxed, but over the years, the list of taxable service is expanding and at present 105 services are under tax net.
This blog seeks to demystify the service tax on Consulting Engineers.
If you have any query or comment, pl do not hesitate to mail at consult_hardin@yahoo.com. I will be obliged to hear you. Your feedback is always welcome.
THANK YOU
To increase the tax base and tape new areas for revenue, Government of India has started imposing Service Tax on designated services since 1994. Initially, a few services were taxed, but over the years, the list of taxable service is expanding and at present 105 services are under tax net.
This blog seeks to demystify the service tax on Consulting Engineers.
If you have any query or comment, pl do not hesitate to mail at consult_hardin@yahoo.com. I will be obliged to hear you. Your feedback is always welcome.
THANK YOU
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