TMI Blog2001 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... is a division of Tata Sons Limited engaged in the development of Computer Software. Upon the introduction of service tax under Chapter V of Finance Act, 1994, it appears to have applied for and secured registration as a consulting engineer in terms of a certificate dated 9th of January, 1998. The Central Excise Authorities being of the opinion that the petitioner was engaged in providing 'taxable service' as a consulting engineer called upon the Company to furnish details of the value of the service rendered for the period 7th of July, 1997 to 30th of September, 1998. In reply, the Company appears to have argued that in terms of a resolution of the Planning Commission published in a Gazette of India, Extraordinary, Part I, dated 25th of July, 1998, service tax was not applicable to Computer Software Development Industries . This was followed by another letter dated 25th of January, 1999 from the petitioner, in which it was contended that since the petitioner was a division of Tata Sons Limited, it did not fall within the purview of the expression "consulting engineer" as defined in Clause (13) of Section 65 of the Finance Act, 1994. The respondents remained dissatisfied with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjections come to the conclusion that the petitioner-Company was liable to pay Rs. 9,88,379/- towards tax for the period in question. Besides the Commissioner has imposed a penalty of Rs. 9,88,379/- under Section 76 of the Finance Act and a penalty of Rs. 2,000/- in respect of each ST-3 return which the assessee had not filed up to 30th of September, 1998. Proceedings under Section 78 of the Finance Act were however dropped. Aggrieved by the said order, the petitioner has preferred an appeal before the Commissioner of Central Excise, Appeal. It is during the pendency of the said Appeal that the present Writ Petition has been filed challenging the validity of the order made by the Additional Commissioner and for a declaration as already stated earlier. It is pertinent to mention that the maintainability of this petition on account of the pendency of the appeal filed by the petitioner has not been questioned by the respondents. 4. I have heard Counsel for the parties at considerable length. The short question that falls for consideration is whether the petitioner-Company is liable to pay service tax under Chapter V of Finance Act as amended from time to time. According to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides that every person providing taxable service to any person shall collect the service tax at the rate specified in Section 66. That provision may at this stage be gainfully extracted : "68. Collection and recovery of service tax. - (1) Every person providing taxable service to any person shall collect the service tax at the rate specified in Section 66. (1A) Notwithstanding anything contained in sub-section (1) of Section 68, in respect of the taxable service referred to in items (g) to (r) of sub-clause (41) of Section 65, the service tax for such service shall be collected from such person and in such manner as may be prescribed at the rate specified in Section 66 and all the provisions of this Chapter shall apply to such person as if he is the person responsible for collecting the service tax in relation to such service. (2) The service tax collected during any calender month in accordance with the provisions of sub-section (1) or sub-section (1A), as the case may be, shall be paid to the credit of the Central Government by the 15th of the month immediately following the said calender month. (3) Any person, responsible for collecting the service tax, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any service provided by it even when the same may relate to any discipline of engineering and be based on the opinion of qualified engineers engaged by it cannot be regarded as a taxable service. The argument is no doubt attractive though not equally sound. The reasons are not far to seek. The question in essence is whether the scheme of the Act makes any distinction between services rendered or provided by individuals and partnership concerns on the one hand and incorporated companies on the other. The answer has to be in the negative. As noticed earlier, the Act aims at levying a tax on the services declared taxable regardless whether the same are provided by a natural or a juristic person. There is no distinction under the Act between the provider of a service, who is an individual, a partnership concern or an incorporated company. The liability to pay tax on the service provided falls uniformly on all the three, provided the service is of a kind that has been declared taxable under Section 65(48) of the Act. Viewed thus, what is taxed by the Act in the case of service provided by consultant engineers is the service provided directly or indirectly in the nature of advice, consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction with Section 24(2) for the purpose in question. If the purpose of a particular provision is easily discernible from the whole scheme of the Act which in this case is, to counteract, the effect of the transfer of assets so far as computation of income of the assessee is concerned then bearing that purpose in mind, the intention must be found out from the language used by the Legislature and if strict literal construction leads to an absurd result i.e. result not intended to be subserved by the object of the legislation then if other construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction." 9. Reference may also be made to the decision of the Supreme Court in Nagpur Electric Light Power Co. Ltd., and Others v. K. Shreepathirao [AIR 1958 SC 658], where the Court declared that even a definition clause in an enactment must derive its meaning from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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