C.C.E., Jaipur I vs Shah Technical Consultant Pvt. Ltd.

Revenue has preferred this appeal against the order passed by the Commissioner (Appeals), Customs and Central Excise, Jaipur dated 18.5.2007,

allowing an appeal preferred by the respondent/assessee against the adjudication order dated 24.8.2006 passed by the Joint Commissioner of Central

Excise, Jaipur.

Proceedings were initiated against the assessee proposing service tax demand of Rs.14,60,386/-, apart from interest and penalties, for having under-

reported the gross consideration charged by it for having provided “consulting engineer†service during 2001 to March, 2005. The alleged under-

reporting was regarding reimbursement of the expenses incurred by the assessee for having provided “consulting engineer†service during the

relevant period. The petitioner is a private limited company registered under the Companies Act, 1956. The primary Authority concluded that

reimbursement of the expenses incurred by the assessee on purchase of fixed assets i.e. furniture, office equipment, travelling per diem, production of

tenders and reports, photocopying, payment of legal fess etc. are liable to be included in the gross consideration received for having provided the

taxable service; that these receipts were not reported and thus under-remittance of tax occurred.

The Appellate Authority however granted relief by excluding the expenses reimbursed. Consequently, the appeal of the assessee was allowed.

The Karnataka High Court and the Delhi High Court in C.S.T., Bangalore vs. Turbotech Precision Engineering Pvt. Ltd. - 2010 (18) STR 545

(Kar.) and C.C.E.& Service Tax vs. Simplex Infrastructure & Foundry Works - 2014 (34) STR 191 (Del.) clearly ruled that prior to 1.5.2006, a

company registered under the Companies Act, 1956 was not included within the definition of “consulting engineer†defined in Section 65(31) of

the Finance Act, 1994.

In the light of the binding precedents, the respondent/assessee is not liable to remit service tax for providing “consulting engineer†service

during 2001 to March, 2005, prior to 1.5.2006.

On the analysis above, the appeal by Revenue has no merits and is accordingly dismissed. No costs.