TMI Blog2010 (7) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... anning etc., are apparently in the nature of projects involving application of social science principles. The revenue has not shown that any techniques or principles of pure and applied sciences were applied in the implementation of the governmental schemes by the assessee. - STA Nos. 475 & 555 of 2008 & 432/2009 - - - Dated:- 22-7-2010 - CORAM : Hon'ble Mr. P. G. Chacko, Member (Judicial) Hon'ble Mr. P. Karthikeyan, Member (Technical) FINAL ORDER PER SHRI P.G. CHACKO Two of these appeals were filed by the assessee and remaining one by the revenue. Appeal No ST/555/08 filed by the assessee and Appeal No ST 475/2008 filed by the revenue are directed against the Commissioner's order No 15/2008. The assessee is aggrieved by demand of service tax of over Rs 1.9 crores for the period 2001-2002 to 2005-2006 confirmed against them under the proviso to sub-section 1 of Section 73 of the Finance Act 1994. They have also challenged the Commissioner's proposal to levy interest on tax under Section 75 of the Act. Further, they have also challenged penalty equal to tax imposed by the Commissioner under Section 78 of the Act. The assessee has also challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid grants-in-aid to the assessee. This payment was often made in instalments, each instalment having been paid upon production of utilization certificate by the assessee. The assessee did not pay service tax on these amounts, while they paid service tax on the consideration received from non-government agencies for advice, consulting or technical assistance rendered to them, such payments of tax being under the head consulting engineer's service. The department wanted to levy service tax on the grants-in-aid received by the assessee from the government for implementation of the latter's welfare schemes under the head scientific or technical consultancy under Section 65(105) (za) of the Finance Act 1994 read with Section 65(92) of the Act. This taxable service was introduced with effect from 16.07.2001 and defined as service provided or to be provided to a client by a scientist or technocrat or any science or technology institution or organization in relation to scientific or technical consultancy/'' This definition of the taxable service covers the period of dispute in this case. Section 65(92), as this provision stood originally, reads thus: Scientific or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmits that, as the assessee is not a public-funded research institution, nothing contained in the Board's instructions dated 09.07.2001 would be applicable to this case. This submission has been made inasmuch as the learned Commissioner relied on the said instructions of the Board. It is the further submission of the learned counsel that the entire demand of service tax is based on balance-sheets and the profit-and-loss accounts of the company for the relevant period. The adjudicating authority has taken the income from operations as the taxable value for each financial year and has arrived at the amount of service tax after deducting the amount of service tax already paid by them as 'consulting engineers' for the same period. The learned counsel has also endeavoured to make out a case against a major part of the demand of tax on the ground of limitation. He submits that nothing was suppressed by the assessee and that all the relevant information had been passed on to the department as early as in January 2004. It is submitted that, when the departmental officers visited their premises on 19.01.2004, the assessee furnished to them all the relevant facts. Subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. It is submitted,, that Section 76 as amended on 18.04.2006 provided a higher penalty (Rs 200/- per day or 2% of the tax whichever is higher). According to the learned JCDR, who reiterates the view taken by the Review Committee (Committee of Chief Commissioners), this penalty should have been imposed for the prior period as well 6. We have given careful consideration to the submissions. It is not in dispute that the assessee-company had implemented welfare schemes for the Central and State governments for the benefit of the poor or otherwise vulnerable/weaker sections of the society and collected grants-in-aid from the governments concerned. It is not in dispute that these grants-in-aid had been totally utilized for implementing the welfare schemes. Nothing over and above these grants-in-aid was received by the assessee from any of the governments. In other words, the assessee did not receive any consideration for any service' to the governments. Therefore, we hold that, in the implementation of the Governmental schemes, the assessee as implementing agency did not render any taxable service to the government. The department seems to be considering the Governments to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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