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2015 (10) TMI 980 - CESTAT MUMBAI

2015 (10) TMI 980 - CESTAT MUMBAI - 2015 (40) S.T.R. 1115 (Tri. - Mumbai) - Consulting engineer services - classification - appellant contends that NEERI, being a registered society, is not within the ambit of taxable service which is restricted to service rendered by engineering firms. - revenue contended that they have rendered service in the category of "scientific or technical consultancy" - revenue has almost entirely relied upon the entry in Wikipedia on the subject of environmental engine .....

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rvice was made taxable and has discharged tax liability on the projects admitted as "engineering consulting". As the disputed projects are not "engineering", they were not taxable during the relevant period. Decided in favour of the Appellant. - Appeal No. ST/295/2011 - Final Order No. A/2671/2015-WZB/STB - Dated:- 29-7-2015 - M V Ravindran, Member (J) And C J Mathew, Member (T) For the Appellant : Shri Durgesh Nadkarni, Adv For the Respondent : Shri A K Goswami, Addl Commissioner (AR) ORDE .....

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ies imposed under section 76 and section 77 of Finance Act, 1994 by the original authority. 2. The appellant is a constituent laboratory of the Council for Scientific & Industrial Research (CSIR) and is registered under the Registration of Societies Act, 1960. It has an elaborate mandate encompassing the field of environmental science and engineering since its creation in 1958. About 125 scientists from various disciplines figure on its rolls and, supported by technical staff, undertake vari .....

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of adjudication before being remanded back by the first appellate authority. Subsequently, the appellant admitted that 151 of the projects undertaken during the period were classifiable as "consulting engineer" service and remitted tax of ₹ 1,20,06,928 by 28 th April 2006 but contested the demand relating to 116 projects which were claimed to be classified under "scientific or technical consultancy" services which was made leviable to tax only from 16 th July 2001. The .....

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ow cause notice. The appellant is now before us seeking to have the impugned order set aside on the ground that they, being a society, are excluded from the definition of service provider and that the identified projects are not covered by the scope of section 65(31). 4. On perusal of the impugned order, we find that the first appellate authority has scrutinized 107 projects of NEERI executed during the relevant period to ascertain liability to tax as provider of "consulting engineer" .....

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appropriateness of the impugned order. Here a note of caution would not be amiss; Wikipedia has universal appeal among internet users because of the range of subjects covered, its widespread accessibility and its amenability to updating but, by reason of the same attributes, it fails to acquire oracular significance. Indutiably, it is a source of knowledge for amateur research and may map out directions for extensive foray into any topic but being subject to emendation at any time from all and s .....

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e Tribunal in re Shakumbari Sugar & Allied Ind Ltd. vs.CCE Meerut -I [2006 (4) STR 567] and re Shree Sidhbal Steels Ltd. vs. CCE Meeerut [2007(8) STR 191] that tendering of a few engineering advice does not detract from the main activity to make it an engineering firm. We do not find this contention to be relevant to the primary dispute before us viz., classification of the service rendered by the appellant in execution of certain specified projects. 6. The learned Counsel and learned Depart .....

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fall back on the relevant provisions of the taxing statute to adjudicate between the respective claims. "Consulting" implies that the work in question is not undertaken by "in-house" experts and would thereby extend to the entire gamut of activities from identifying a problem to execution of the entire work or any one or more of the component parts. Such consulting could, inter alia, relate to engineering or to scientific and technical; and as these constitute distinct and m .....

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. The field has been defined by the Engineers Council for Professional Development, in the United States, as the creative application of "scientific principles to design or develop structures, machines, apparatus, or manufacturing processes, or works utilizing them singly or in combination; or to construct or operate the same will full cognizance of their design; or to forecast their behaviour under specific operating conditions; all as respects an intended function, economic of operation a .....

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mathematics and their extensions into materials science, solid and fluid mechanics, theremodynamics, transfer and rate processes, and systems analysis. Unlike the scientist, the engineer is not free to select the problem that interests him; he must solve problems as they arise; his solution must satisfy conflicting requirements. Usually efficiency costs money; safety adds to complexity; improved performance increases weight. The engineering solution is the optimum solution, the end result that, .....

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ir chemical, electrical or acoustical properties. Important sources of energy include fossil fuels (coal, petroleum, gas), wind, sunlight, falling water, and nuclear fission." 8. Each of the recognised engineering disciplines is, therefore, the application of scientific knowledge to functional needs. We are compelled to draw attention to the word "discipline" because it is expressly used in the definition found in section 65(31) and its importance needs to be accentuated because c .....

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does, individually or as a set of individuals, for another entity. And these are, broadly speaking, civil, mechanical, electrical electronic, chemical and all of them deal with transformation of matter from one form to another. Scientific, on the other hand according to Merriam Webster dictionary, means of, relating to, or exhibiting the methods or principles of science'. To the extent that a project does not advise upon the manner in which matter is to be altered or constructed to solve on .....

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te content, determination of tax liability without examining the specifics is inappropriate. Considering the mandate of the appellant as well as the staffing pattern of the organisation, it is more probable that the projects are research studies which would later require the services of engineers for feasible remedial action. 10. In relation to the second category, substantial reliance has been placed on the same unauthenticated source to hold such assessments to be one facet of environmental en .....

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quire all or certain categories of structures and space utilisation to be preceded by a study of the effect of population and activity on water and air quality as well as on soil, flora and fauna. The conclusions of such studies are examined in the public or a restricted domain to impose such terms and conditions of usage on the project proposal to mitigate and compensate for degradation. When the project developer decides to comply with the terms and conditions, action thereon for design and en .....

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