2007 (4) TMI 762 - AT - Service Tax

Summary

Issues involved: Service tax demand on construction of a power project, whether the contract falls under "engineering consultancy" and applicability of the new provision in the Finance Bill, 2007.

Summary:
The Appellate Tribunal CESTAT NEW DELHI heard the case regarding a Service tax demand related to the construction of a power project. The issue was whether the drawing, design, etc. portion of the contract should be taxable as "engineering consultancy." The appellant argued that previous Tribunal decisions and a Supreme Court ruling supported that works contracts cannot be subjected to Service tax as engineering consultancy. Additionally, the appellant pointed out that a new provision in the Finance Bill, 2007, expanded the scope of the levy for such contracts. On the other hand, the Respondent referred to a Tribunal decision stating that the service portion of a know-how contract can be subjected to Service tax as consulting engineer. The Tribunal found that the appellant's case aligns with previous decisions and the new provision in the Finance Bill, indicating that works contracts attract levy only after that provision is enacted. Consequently, the Tribunal allowed the stay application, halting recovery until the appeal is disposed of. The appeal was directed to be listed on priority due to the significant tax amount involved, with a specific timeline set by the Registry for listing the appeal.