IICT Not Liable for Service Tax for Availing Consultation and Opinion from Designated Individuals: CESTAT [Read Order]

Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench, held that Indian Institute of Chemical Technology is not liable to pay service tax on consultation and opinion received from designated individuals. Any demand on service tax would be made from those designated individuals providing consultation and technical opinion.

The appellant, Indian Institute of Chemical Technology (IICT), is a constituent unit of CSIR under the Ministry of Science and Technology. They provide various scientific and technical research activities from their scientists and technical experts in their specialized fields.

The respondent noticed that the appellant had not paid Service Tax under Scientific and Technical Consultancy Service (STCS) on Grants-in-Aid Projects, including projects under Academic Grants.

The counsel for the appellant, Joseph Dominic, submitted that the fundings given by specific institutions are linked with the designated individual providing technical consultation or opinion, who are either working or retired from the appellant organisation.

It was contended that the funds were first routed through the appellant’s account, and thereafter the appellant paid the designated individuals after deducting TDS. Therefore, the appellant was not involved in providing any service to such entities. It was further contended that if service tax is leviable, it would be leviable on the designated individuals.

Raji Reddy appeared as counsel for the respondent.

Angad Prasad, Judicial Member, and A.K. Jyotishi, Technical Member, noted that the funds were meant for designated individuals for specified projects for providing scientific and technical opinion and consultation directly to the clients who provided the funds.

The Tribunal observed that the funds were not directly credited to the designated individuals’ accounts but were routed through the appellant’s account only for accounting purposes and to ensure compliance with TDS and other legal requirements.

The Tribunal held that there was no dispute that the designated individuals had provided Scientific and Technical Consultancy Services. However, any service tax demand, if applicable, should be raised against those designated individuals, who may or may not be liable to pay service tax depending on the threshold exemption available to individuals.

Accordingly, the Tribunal set aside the Commissioner’s order.