6. Services may be provided either directly or indirectly

6.1
The word ‘indirectly’ is indicative of the fact that even indirect advice, consultancy or technical assistance in one or more disciplines of engineering is covered. There may be cases where a consulting engineer does not provide engineering services to a client directly but in the capacity of a sub-consultant, etc., to another consulting engineer who is prime consultant. In this regard, the Government vide Circular F.No. B. 43/5/97 TRU, dated 2-7-1997 has clarified that the services should be rendered to a client directly, and not in the capacity of a sub-consultant/associate consultant to another consulting engineer, who is the prime consultant. When services are rendered to the prime consultant, the levy of service tax does not fall on the sub-consultant but is on the prime or main consulting engineer who raises a bill on his client (which would include the charge for services rendered by the sub-consultant).

6.2
A service rendered indirectly will be liable to tax, if the prime contractor fails to discharge his service tax liability or is not exigible to service tax. In a work contract, the contractor, a consulting firm, may seek opinions from other consulting engineers. As the work contracts are not exigible to tax under consulting engineer service, the consulting engineer providing opinion will be liable to pay service tax.

6.3
In the case of L&T-Sargent & Lundy Ltd. v. CCE [Mumbai Bench], the appellant provided engineering services to M/s. Larsen & Toubro Limited and paid the service tax and also included the same in the bills raised on M/s. Larsen & Toubro Limited. They later realised that M/s. Larsen & Toubro Limited being consulting engineers themselves were liable to pay the service tax on the services rendered by them to the customers. On that ground, they filed a refund claim of the tax already paid. The Dy. Commissioner accepted the contention and directed refund to be paid. This order was reviewed by the jurisdictional Commissioner in terms of section 84 of the Finance Act, 1994. But the Tribunal allowed the same.

6.4
In the case of Nokia India P Ltd. Vs CCE (2006) 1 STR 233(Del), the tribunal has revealed a different dimension of the term ‘directly or indirectly’ by deciding that the expression consultant engineer encompasses direct or indirect rendering of such service including technical assistance and this includes the training of personnel, software support, operation and maintenance services, emergency support services, technical consultancy etc.