3. Services must be provided by any professionally qualified engineer or body corporate or any other firm

3.1
The term ‘professionally qualified engineer’ has not been defined in the Finance Act. A holder of degree of engineering or a diploma of engineering from a recognized university can be considered as professionally qualified engineer. However, a certificate holder from Industrial Training Institute can not be considered as a professionally qualified engineer[1]. A professionally qualified engineer may be self employed and may or may not employ others to assist him[2].

3.2
The definition of ‘consulting engineer’ includes ‘body corporate’ or ‘any other firm’. The term ‘body corporate’ and ‘any other firm’ are omnibus and will include all types of association of individuals whether incorporated or not.

3.3
Prior to amendment, consulting engineering service provided by an ‘engineering firm’ was subject to tax. The term ‘engineering firm’ was not defined in the Finance Act. Some doubts were expressed regarding the levy of service tax on corporate assessee. The issue is no longer res integra in view of various judgments wherein it has been held that the word ‘firm’ has wider meaning including any business concern and is not limited to partnership firm alone. Even a limited company will be covered within the ambit of firm[3]. Therefore, the service provider can be any person, i.e., individual, firm or company.

3.4
Further, prior to amendment, service provided by an ‘engineering firm’ was taxable. What constituted an ‘engineering firm’ was not defined in the Finance Act. The commercial understanding of an ‘engineering firm’ is a firm or an entity whose main business is to provide consultancy in one or more disciplines of engineering. If the firm or company is not known as ‘engineering firm’ it was not liable to pay service tax, even though it may have rendered engineering consultancy[4]. Further, in the case of CCE v. Jain Steel [2005 (2) STT 142 (New Delhi)], it was held that where a firm did not consist of any professionally qualified persons, it was not liable to pay service tax on services rendered by it. In case of Roots Industries Ltd. v. CCE [2005] 2 STT 30 (Chennai - CESTAT) also, it was held that as per the definitions of consulting engineer and ‘Engineering consultancy service’, such service should be rendered by a professionally qualified engineer.

3.5
The words engineering firm has been replaced with ‘any other body corporate or any other firm’ vide Finance Act, 2006. After amendment in the definition of the consulting engineer, it appears that a company or a firm who renders any advice, consultancy or technical assistance to a client in any disciplines of engineering will be covered within the taxable service, irrespective of the fact whether such company or firm is known as engineering firm or not. However, it is still a matter of dispute as to whether the company or firm should have professionally qualified engineers to be exigible to service tax under consulting engineer service.

[1] [2006 (2) S.T.R. 342 (Tri. - Bang.)]

[2] The Trade Notice No. 7/97-ST, dated 4-7-1997, Mumbai Commissionerate-I I

[3] [Nokia (I) Pvt Ltd Vs. Commissioner of Customs, 2006 (1) S.T.R. 233 (Tri. - Del.)] [Tata Consultancy Services Vs. UOI, 2001 (130) E.L.T. 726 (Kar.)] [M.N. Dastur & Company Ltd. Vs. UOI, 2002 (140) E.L.T. 341 (Cal.)], [Transweigh (India) Ltd. v. CCE [2004] 64 RLT 830 (CESTAT - Mum.)]

[4] [Pfizer Ltd. Vs. commissioner of Central Excise, 2005 (188) E.L.T. 456 (Tri. - Mumbai)], [Shakumbari Sugar & Allied Industries Ltd vs CCE],