Finance Act, 1994: s.65(31) – Service Tax – Definition of “consulting engineer” u/s. 65(31) of the Act – Whether ‘body corporate’ is covered within its sweep prior to 2005 amendment – Held: Even before the 2005 amendment, the term ‘consulting engineer’ included “body corporate” – Even in s.3(42) of the General Clauses Act, 1897, the word “person” includes any company or association or body of individuals, whether incorporated or not – Therefore, there is no logic and/or reason to exclude a” body corporate” from the definition of “consulting engineer” and to exclude the services of a “consulting engineer” rendered by a “body corporate” to exclude and/or exempt from the service tax net – Such an interpretation would lead to anomaly and absurdity – It will create two different classes providing the same services which could not be the intention of the Parliament/Legislature – General Clauses Act, 1897 – s.3(42).
Partly allowing the appeal and remitting the matter to CESTAT, the Court
HELD : 1.1. Prior to amendment 2005, by Circular/Trade Notice dated 4.7.1997, the definition of “consulting engineer” under the Finance Act, 1994 was specifically explained and as per the said Trade Notice, “consulting engineer” means any professionally qualified engineer or engineering firm who, either directly or indirectly, venders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. It also further clarified that “consulting engineer” shall include self-employed professionally qualified engineer who may or may not have employed others to assist him or it could an engineering firm – whether organised as a sole proprietorship – partnership, a private or a Public Ltd. company. It can be seen that it was never the intention of the legislation to exclude a “body corporate” from the definition of “consulting engineer” and from the “service tax net”. [Para10][18-A-C]
1.2 In many places under the Finance Act, 1994, the Parliament/Legislature has used the word “person” (Sections 68,
69 and 70). At this stage, Section 3(42) of the General Clauses Act, 1897 is also required to be referred to, considered and applied. The word “person” includes any company or association or body of individuals, whether incorporated or not. Therefore, there is no logic and/or reason to exclude a” body corporate” from the definition of “consulting engineer” and to exclude the services of a “consulting engineer” rendered by a “body corporate” to exclude and/or exempt from the service tax net. Such an interpretation would lead to anomaly and absurdity. It will create two different classes providing the same services which could not be the intention of the Parliament/Legislature. [Para 11][33-F-H]
1.3 Under the Finance Act, 1994, in the definition of “consulting engineer”, a “body corporate” is included and/or to be read into so as to bring a “body corporate” being a service provider providing the consultancy engineering services within the service tax net, as such, it is not necessary to consider whether the subsequent amendment amending the definition of “consulting engineer” by way of 2005 amendment adding a “body corporate” within the definition of “consulting engineer” would be retrospective and/or whether it can be said to be a clarificatory in nature or not and the said issue would become academic now. [Para 12][34-B-D]
1.4 The respondent, being a service provider providing consultancy engineering services, was/is liable to pay the service tax for such services being “consulting engineer” within the definition of Section 65(31) of the Finance Act, 1994 and therefore and thereby liable to pay the service tax under Section 66 r/w Section 68 of the Finance Act, 1994. However, from the impugned judgment and order passed by the CESTAT, it appears that the CESTAT has considered only one issue namely whether for the period pre 01.05.2006 – the Finance Bill, 2006 whether “body corporate” was covered within the definition of “consulting ELECTRIC POWER CONST. CORP.
engineer” under Section 65(31) of the Finance Act, 1994 and had not considered any other issues/grounds raised in the Memo of Appeal before the CESTAT. Therefore, the matter is remanded to the CESTAT to examine and decide the appeal on other grounds. [Para 13][34-D-G]
Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co., (2018) 9 SCC 1: [2018] 7 SCR 1191 – followed.
Commissioner of Income Tax, Bangalore v. J.H. Gotla, Yadagiri, (1985) 4 SCC 343 : [1985] 2 Suppl. SCR 711; K.P. Varghese v. Income Tax Officer, Ernakulam (1981)
4 SCC 173 : [1982] 1 SCR 629 – relied on.
TCS v. Union of India 2016 (44) STR 33 (KAR); M.N. Dastur Ltd. v. Union of India 2006 (4) STR (3) CAL – approved.
CCE v. Simplex Infrastructure & Laundry Works 2014
(34) STR 191 (DEL), ST Bangalore v. Turbotech Precision 2010 (18) STR 545, Commissioner of Service Tax, Bangalore v. ARACO Corporation, Japan 2010 SCC OnLine KAR 5448, Commissioner, Central Excise & Customs, Kerala v. Larsen & Toubro Limited, (2016)
1 SCC 170 : [2015] 8 SCR 1046, Motipur Zamindari Co. Ltd. v. State of Bihar, AIR 1953 SC 320 : [1953] SCR 720; Vanguard Fire & General Insurance Co. Ltd., Madras v. Fraser and Ross, AIR 1960 SC 971: [1960] SCR 857; Bhag Mal v. Ch. Prabhu Ram, (1985) 1 SCC
61 : [1985] 1 SCR 1099; Pappu Sweets and Biscuits v. Commissioner of Trade Tax, U.P, Lucknow (1998) 7 SCC 228 : [1998] 2 Suppl. SCR 119; Gem Granites v. CIT, T.N., (2005) 1 SCC 289 : [2004] 6 Suppl. SCR 332; CIT v. Century Spinning and Manufacturing Co. Ltd. (1953) 24 ITR 499, Vazir Sultan Tobacco Co. Ltd. v. CIT, A.P., Hyderabad, (1981) 4 SCC 435 : [1982] 1 SCR 789; CIT v. Vatika Township Private Limited, (2015)
1 SCC 1 : [2014] 12 SCR 1037; Tata Consultancy Services v. Union of India, 2001 (130) ELT 726; M.N. Dastur Limited v. Union of India, 2006 (2) STR 532 CAL – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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