Service tax liability of registered architect.

PJ/CASE LAW/2015-16/2643

Case:-PRASHANT VISHWASRAO DEORE VERSUS COMMISSIONER OF C. EXCISE, NASHIK

Citation:-2015 (37) S.T.R. 669 (Tri. - Mumbai)

Brief Facts:-The appellant filed this appeal against the demand of Service Tax of Rs. 37,205/- along with interest and a penalty of Rs. 74,410/- imposed under Section 78 of the Finance Act, 1994. The demand is confirmed on the ground that the appellant is rendering the services of Architect but not paying Service Tax on these services.
The case of the Revenue is that in the Income Tax Return for the relevant period, the appellant has shown some amount as receipt for architectural consultancy but he was not registered with the Revenue as service provider. A show cause notice was issued to the appellant demanding Service Tax in respect of amount received from the clients for “Architectural Services”. The adjudicating authority confirmed the demand and also imposed the penalty. The appellant filed an appeal before the Commissioner (Appeals) who in turn reduced the Service Tax amount to Rs. 37,205/- and also reduced the penalty amount to Rs. 74,410/-. The Commissioner (Appeals) has also set aside the penalty amount imposed under Section 76 of the Finance Act.

Appellant contentions:- The only contention of the appellant is that the appellant had not provided any services of architectural consultancy. The appellant was working with some Contractors who are engaged in the activities of executing various government contracts in respect of construction of small dams, roads, culverts, bridges, laying of irrigation pipelines etc., which does not fall in the scope of ‘Architectural services’. Hence the appellant submits that the demand is not sustainable. Since the Service Tax amount along with interest has already been paid, imposition of penalty under Section 78 is harsh.

Respondent contentions:- The Revenue submitted that in the Income Tax Return, which was duly signed by the appellant, an income was shown as ‘receipt for architectural consultancy’. Statement of the appellant was also recorded and in his statement the appellant admitted that the appellant is associated with the Contractors who undertake civil works and the appellant being an Architect, is an advisor to the Contractors. The Revenue relied upon the provisions of Section 65(6) of the Finance Act, 1994 to submit that Architect means any person whose name is, for the time being entered in the register of architects maintained under Section 23 of the Architect Act, 1972 and also includes any commercial concern engaged in any manner whether directly or indirectly in rendering services in the field of Architect.

Reasoning of Judgment:- Heard both sides.The appellant is a registered ‘Architect’ with the Indian Council of Architecture under the Architects Act, 1972. These facts are not in dispute. The appellant is also associated with the Civil Contractor who are undertaking various civil contracts of the Government. In these circumstances, we find no merit in the contention of the appellant that he has only undertaken the services in the form of liaison work and back office services that were rendered to the contractors. In view of the above we find no infirmity in the impugned demand with regard to the duty and interest.
In respect of the penalty imposed under Section 78, we find that the penalty amount of Rs. 74,410/- is on the higher side therefore the same is reduced to Rs. 37,205/- which is equivalent to the Service Tax demand. Otherwise the impugned order is upheld.

Decision:- Appeal disposed off.

Comment:-The crux of the case is that the assessee registered as ‘Architect’ with Indian Council of Architecture under the Architects Act, 1972, will be deemed to be providing architect services and will be liable to pay service tax. Moreover, it does not make any difference if he has undertaken the services in the form of liaison work and back office services to contractors or Civil Engineers. Thus, assessee is compulsorily liable to get registered & pay service tax.

Prepared By:Meet Jain

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PJ/CASE LAW/2015-16/2643

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