TMI Blog2001 (4) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ation sent by the respondent on 1-5-1998 vide C. No. IV/16/29/97-STC. 2. The respondent, Commissioner of Central Excise, Chennai by its letter, dated 1-5-1998 informed the Chairman of the Institution of Valuers that as per sub-clause (g) of clause 41 of Section 65 of the Finance Act, 1994 as amended, the term "taxable service" has been defined as any service provided to a client, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering is deemed to be a "taxable service". Similarly, it was pointed out that the members of the petitioner institution could be covered under the definition of "consulting engineer" as they were professionally qualified engineers and were directly or indirectly rendering consultancy or technical assistance to a client in one or more disciplines of the engineering. It was then pointed out that the Directorate of Service Tax, Mumbai in their letter, dated 27-3-1998 had clarified that the services rendered as "valuers" of immovable property other than agricultural lands, plantations, forest, mines and quarries and as valuers of plant and machinery would fall within the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 65 and collected in such manner as may be prescribed. Section 67 provides for the manner in which the valuation of taxable service for charging service tax is done and sub-section (f) defines the value of the "taxable services" of a "consulting engineer" as under : "in relation to service provided by a consulting engineer to a client, shall be the gross amount charged by such engineer from the client for advice, consultancy or technical assistance in any manner in one or more disciplines of engineering." 5. While the above provisions relate to the service tax, it will also be better to see some of the provisions of the Wealth Tax Act, which were heavily relied upon by the learned Counsel. They are Chapter VII-B of the Wealth Tax Act. That chapter was introduced by the Taxation Laws Amendment Act, 1972 with effect from 15-11-1972. Section 34AA permits the appearance by the registered valuers representing and/or for an assessee before any Wealth Tax authority or the Appellate Tribunal in connection with any matter relating to valuation of any asset except where such an assessee is required to attend in person. Section 34AB is extremely important and runs as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cardamom plantations; (iv) valuer of forests; (v) valuer or mines and quarries; (vi) valuer of stocks, shares, debentures, securities, shares in partnership firms, and of business assets including goodwill; (vii) valuer of machinery and plant; (viii) valuer of jewellery; (ix) valuer of works of art; (x) valuer of life interest, reversions and interest in expectancy. Out of these, presently we are concerned only with the two kinds of valuers as per the pleadings in the petition. They are : (i) a valuer of immovable property as provided in Rule 8A(2) and (ii) a valuer of the machinery and plant as provided in Rule 8A(8). It will be better to see the qualifications which are prescribed for these two categories of valuers. 7. Rule 8A(2), which provides the qualifications for a valuer of immovable property, reads as follows : " Qualifications of registered valuers : 8A. (2) A valuer of immovable property (other than agricultural lands, plantations, forests, mines and quarries) shall have the following qualifications, namely :- (i) he must - (A) be a graduate in civil engineering, architecture or town planning of a recognised university; or (B) be a post-graduate in valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployer car rying a remuneration of not less than Rs. 2,000 per month, and in either case, must have retired or resigned from such employment after having rendered service as a mechani cal or electrical engineer for a period of not less than ten years, or (c) as a professor, reader or lecturer in a university, college or institution preparing students for a degree in mechanical or electrical engineering or for any qualification referred to in clause (i) and must have retired or resigned from such employment after having taught for a period of not less than ten years; or, (B) he must have been in practice as a consulting engineer for a period of not less than ten years and must have acquired experience in the valuation of machi nery and plant and his gross receipts from such practice should not be less than fifty thousand rupees in any three of the five prece ding years." 8. The language of Rule 8A(2) suggests that a graduate in Civil Engineering can become a "registered valuer" if he fulfils the conditions in Rule 8A(2)(ii). Sub-rule (c) of Rule 8A(2)(ii)(A) is very important. It suggests that such a person besides being an engineering graduate must have been a professor, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o dispute that such persons are evaluation only the machinery or plant on the basis of their engineering knowledge and such advice that they give by evaluating the machinery or plant for the purposes of wealth-tax would certainly involve the advice or technical assistance of the nature which can be described as the "discipline of engineering". According to the learned Counsel, this advice or the consultancy service offered or the technical assistance given would be in the realm of "engineering" alone. The learned Counsel points out that for being a "registered valuer" of plant and machinery under Rule 8A(8), the concerned person must be an engineer as provided under the Rule 8A(8) and the prescribed qualifications themselves would speak the necessity of such a person having the knowledge of engineering. The learned Counsel contends and in our opinion rightly that if there was no element of "engineering discipline" involved in the advice or consultancy or technical assistance offered by a registered valuer, there would be no necessity of such a person being an engineer and holding a engineering degree. 12. When we consider the qualifications, it is obvious that those qualificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f "Architect/Valuers" could attract the service tax or not. The concerned authority in the reply had stated that the services offered as a "valuer" would not attract the levy under the purview of "consulting engineer". The learned Counsel for the petitioner very heavily relied on this letter and pointed out that this would completely estop the respondent from pleading that the services offered by an engineer in the capacity of a "valuer" come under the category of a "taxable services". 15. Learned Counsel for the respondent has pointed out that by a subsequent letter, dated 1-5-1998 written to the Chairman, Institute of Valuers. Tamil Nadu Zone, the Commissioner of Central Excise, Chennai has specifically taken the position that the services rendered as "valuers" of immovable property (other than the agricultural lands, plantations, forests, mines and quarries) and as valuers of plant and machinery shall fall within the purview of "consulting engineer" and shall attract the " service tax". This letter is based on the clarification offered by the Directorate of Service Tax, Mumbai in their letter F. No. V/DGST/21(7)2/98/658, dated 27-3-1998. The learned Counsel, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be rejected. The last sentence itself suggests that the "list is not exhaustive and it only illustrates the wide scope and nature of the services rendered by a consulting engineer". In our opinion, a consulting engineer has to use his experience and knowledge of engineering necessarily to arrive at a correct valuation of the immovable property. The argument that mere valuation of an immovable property is not an advice in the nature of "engineering advice" is obviously incorrect because where the knowledge in engineering itself is a must and is a basis for giving the valuation for the benefit of the assessee under the Wealth Tax Act then, it cannot be said that the advice is not in the "engineering discipline". It must be first remembered that what has fallen for consideration before us is a subject of service tax and the provisions under the Finance Act and not the provisions under the Wealth Tax Act, which are being relied upon by the learned Counsel for the petitioner. Wherever an advice is given by an engineer on the basis of his engineering knowledge, skill and experience then such an advice would be in the realm of "engineering advice" or atleast pertaining to the "enginee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tax on profession. In paragraph 8 it is suggested that while the materials used by the interior decorators are exempted from the gross amount billed by them, the similar exemption is not provided in case of consulting engineers and, therefore, the provisions are "discriminatory". A challenge then raised in paragraphs 9 and 10 of the petition on the basis of Article 14 and Article 19(1)(g) of the Constitution. Considering the petition generally, though we were never addressed by the learned Counsel, we feel that there is a "tacit admission" that the members of the petitioner association are the "engineers" and having the engineering qualifications. In paragraph 2, the sentence reads as follows : "All the members of the Association are either registered surveyors with the Municipality and Panchayat or consulting engineers rendering consultancy to their clients in the respective branches." 20. We are not at all impressed by the challenge to the "legislative competence" and, in fact, such challenge is not properly worded in the petition at all. All that has been said in paragraph 7 is that to impose service tax on professionals like the Consulting Engineers, Chartered Account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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