INDIAN INSTITUTE OF QUALITY Vs. COMMR. OF CUSTOMS

JUDGEMENT

(1.) THE lower authorities have demanded Service Tax of Rs. 6,97,315/ - from the appellants treating them as 'Consulting Engineers' within the definition of this expression under Section 65 of the Finance Act, 1994 for the period April, 2000 - June, 2003. The authorities have also imposed on them penalties under various provisions of the Finance Act. After examining the records and hearing both sides, I note that the appellants obtained registration with the Service Tax authorities in August, 2003. This registration is in respect of Test Inspection and Certification'. The case of the appellants is that Test Inspection and Certification' was not a taxable service prior to 1 -7 -2003 and that this service was not to be treated on par with Consulting Engineers' Service for the purpose of levy of tax for any period prior to the said date. In this connection, learned Consultant refers to the definition of 'Consulting Engineer' and submits that no consultancy, advice or technical assistance was involved in Test Inspection and Certification' done by the appellants to their customers during the period of dispute. Learned SDR, has contested this claim by referring to provisions of the relevant agreements available on record. It is submitted that mechanical engineers of the appellant -institution were rendering the services of technical advice/assistance by way of 'Test Inspection and Certification', to their customers in respect of the latter's machinery. Learned Consultant has also resisted the demand of tax on the ground of limitation. It is said that the demand raised in show -cause notice dated 29 -10 -2005 for the period April, 2000 - June, 2003 is heavily time -barred and that there was no valid reason to invoke the extended period of limitation. Learned SDR on the other hand, submits that the appellants had suppressed material facts before the department and hence the extended period of limitation was rightly invoked against them. Learned Consultant has also pleaded financial hardships. In this connection, he has relied on the 'balance sheet' and 'profit and loss account' for the year ended 31 -3 -2004, available on record.

(2.) AFTER giving careful consideration to the submissions, we find that, during the period of dispute, the appellants had admittedly inspected their customers' machines and/or components thereof and certified them fit to be used by the latter. M/s. Bharat Heavy Electricals Ltd. (BHEL) and similar heavy industries were the customers of the appellants. An agreement between the appellants and M/s. BHEL is available on record. It appears from the terms and conditions of this agreement that the appellants were required to inspect machinery in three categories. In one category, the amount charged by them was exclusive of Service Tax, while, in the other two categories, it was inclusive of Service Tax. Though it was claimed by learned Consultant that no Service Tax was ever charged in the relevant invoices, this claim is not supported by any evidence in the absence of the relevant invoices. It further appears from the agreement that it was the function of the appellants' mechanical engineers to inspect their customers' machinery and to certify the same. In case the machinery required modification of design or other changes, the engineers would render the requisite advice. Prima facie, therefore, the nature of service rendered by the appellants to M/s. BHEL and others during the period of dispute would look like Consulting Engineers' Service. The period of dispute is April, 2000 - June, 2003. The show -cause notice was issued in October, 2005. The extended period of limitation was invoked on the ground of suppression of facts. Learned Consultant has claimed that all the requisite information was furnished to the department at the time of registration with them. But there is no evidence on record of this fact. Had it been shown that copies of the aforesaid agreements together with the relevant invoices had been produced before the departmental authorities at least in August, 2003, the appellant would, perhaps, have been able to establish that there was no suppression on their part from August, 2003. Apparently, this is not the case. Hence the plea of limitation does not appear to be genuine.

(3.) THERE is no evidence of the appellants' present financial position. Hence the plea of financial hardships also cannot be accepted.