(1.) THIS is an application filed by M/s. Hydro S&S Industries Ltd., Pondicherry for waiver of predeposit and stay of recovery of Rs. 30,000/ - being tax on services rendered by the appellants during 2001 and 2002 classified under the Heading 'Consulting Engineer'. The facts of the case are that the department found on inspection of the records of the appellants that they had indicated an amount of Rs. 6.00 lakhs as outstanding from M/s. S&S Metplast, Bangalore. The appellant is a manufacturer of plastic granules and allowed use of its infrastructural facilities such as the R&D Division and the testing facility by M/s. S&S Metplast, Bangalore. After due process of law, the original authority confirmed a demand of Rs. 30,000/ - under Section 75 of the Finance Act, 1994 (the Act), imposed penalties of Rs. 30,000/ - each under Section 76 and 78 of the Act and another penalty of Rs. 2,000/ - under Section 77 of the Act. In the impugned order, the Commissioner (Appeals) affirmed the order of the lower authority.
(2.) MOVING the application, learned Counsel for the appellants submits that the appellant is a manufacturing -firm and is not engaged in rendering any services. The appellant -firm is not an engineering firm and had not rendered any technical assistance to any person. The impugned amount gathered by the department from the balance sheet of the appellant -firm comprises 2 amounts of Rs. 3.00 lakhs each raised in the invoices on M/s. Metplast, Bangalore for allowing the said firm to utilize the infrastructural facilities such as the R&D Division and the testing facility of the appellants. They had also supplied manpower to M/s. Metplast, Bangalore. According to the learned Counsel these activities did not constitute the service of 'Consulting Engineer'. In terms of Section 65(31) of the Act, 'Consulting Engineer' means "any professionally qualified engineer or an engineering 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". Therefore, the impugned activities did not constitute engineering consultancy warranting any demand. Moreover, the customer had not paid the said Rs. 6,00 lakhs and the appellant had written -off the said amount as unrealizable. Service tax was payable only on the gross amount received towards service provided. Therefore the impugned demand deserves to be set aside.
(3.) THE learned SDR submits that by providing the R&D and the testing facility the appellant had provided technical assistance and that the lower authorities had passed the orders in accordance with law. According to him it was not necessary that the service was provided by a qualified engineer or an engineering firm. It was also not material that the taxable amount was not received by the assessee.