Service Tax Leviable on professional fees/ Engineering charges considered under ‘Consulting Engineering Services‘: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the service tax can be levied on the professional fees or engineering charges which were considered under the head of ‘consulting engineering services’. 

Linde Engineering India Private Limited, the appellant assessee was registered with the jurisdictional the service tax department, having a centralized service tax registration and engaged in the business of providing taxable output services under the category of consulting engineer services, erection, commissioning, and installation service, and construction services other than residential complex, including commercial/ industrial buildings or civil structures and works contract services, etc. to customers located within /outside India and also engaged in the provision of services to its clients which are spread in various countries. 

The assessee appealed against the order passed by the adjudicating authority for confirming the service tax demand on various services rendered by the assessee such as Professional fee/engineering services, Corporate cost allocation, Consultancy fees, Bank charges, and others amounting to Rs. 4,94,88,067/- along with interest under Section 75 and penalty under Section 78(1) and 77(2) of the Finance Act,1994. 

Venkateshwaran and Nikita Jain, the counsels for the assessee contended that the services under consideration had been availed by them to execute its work / provide services to its client on their site located outside India and the professional fees/engineering services on which service tax was not paid are those services which are received by them outside India and are consumed outside India in connection with providing the export service. 

Also submitted that Section 66B of the Finance Act provides that service tax shall be leviable on the value of service provided or agreed to be provided by one person to another within taxable territory. Thus, only services rendered in taxable territory were taxable. 

Tara Prakash, the counsel for the department contended that the service tax liability in respect of "Consulting Engineering Service" falling under Section of the Finance Act lies on the recipient located in India irrespective of the fact that the service had been performed in India or consumed in India when the services had been received by a recipient located in India for use concerning business or commerce. 

The Bench observed that in the case of EMI Transmission Limited vs. Commissioner Of Central Excise, the court held that technical testing and analysis service though wholly performed outside India but the same was received by the assessee in India which was indeed used concerning business or commerce. Therefore after 1-4-2011, the service technical testing and analysis were chargeable to Service Tax. 

The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) held that the professional fees/ Engineering charges which are considered under the expression ‘Consulting Engineering Services‘ were chargeable to service tax during the relevant period. 

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates