IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Central Excise Appeal No. 01 of 2006 Commissioner of Central Excise, Meerut – I. ...…………. Appellant Versus M/s Indian Institute of Petroleum, Dehradun. ...…………. Respondent Mr. Arvind Vashisth, Standing Counsel for the appellant-revenue. Mr. V.K. Kohli, Sr. Advocate assisted by Mr. T. Pande, Advocate for the respondent. Coram : Hon’ble Prafulla C. Pant, J. Hon’ble Dharam Veer, J. Prafulla C. Pant, J. (oral) This appeal, preferred under Section 35-G of the Central Excise Act, 1944, is directed against the order dated 11.07.2005, passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred as CESTAT), whereby the Appeal No. ST / 134 / 04 –NB(SM) filed by the assessee (present respondent) was allowed, and order of the revisional authority was set aside. 2 2) The question of law involved in this appeal is as under: Whether, service tax is not leviable on the service in respect of which draft project report by the scientific and technical expert (service provider) is already prepared prior to the date on which the service was brought under the net of service tax? 3) Heard learned counsel for the parties. 4) Brief facts of the case are that the respondent assessee Indian Institute of Petroleum, Hardwar Road, Mohkampur, Dehradun (hereinafter referred as IIP) is a constituent laboratory of the Council of Scientific and Industrial Research (CSIR) which is engaged, inter alia, in providing Scientific and Technical Consultancy to its clients. The service of ‘Scientific and Technical Consultancy’ was brought under the net of the service tax w.e.f. 16th July 2001. The respondent assessee is registered with Central Excise department for payment of service tax for providing said service. A show cause notice was issued by the Central Excise department on 17.01.2003, through the Deputy Commissioner Central Excise, Dehradun, as to why in respect of the four works detailed in the show cause notice, the service tax be not charged. The present dispute relates to item No. 3 i.e. work of laboratory study of Vacuum Gas Oil (VGO), mentioned in the show cause notice, in connection to which the respondent assessee provided its technical service to M/s Numaligarh Refinery Ltd. 3 (hereinafter referred as NRL). The order value of said work was 2.20 lakhs. It appears that the respondent assessee submitted its reply and the authority concerned vide its order dated 16.07.2003, passed order in original (O-in-O) directed the respondent assessee to pay service tax in respect of the other items except the item relating to laboratory study of VGO (work mentioned above). Aggrieved by said order, a revision was filed by the Revenue before the Commissioner of Central Excise, Meerut, which was registered as Revision No. 08/ST/2004 and disposed of vide order dated 12.07.2004, whereby the order of the Deputy Commissioner of Central Excise was reversed in respect of the work of laboratory study of VGO and service tax is charged @ 5% (i.e. Rs. 11,000/- only). On this, the respondent assessee went in appeal before the CESTAT and said authority vide its impugned order dated 11.07.2005, passed in Appeal No. ST / 134 / 04 – SM, allowed the appeal and restored the order of the Deputy Commissioner of Central Excise. Hence, this appeal by Revenue. 5) Admittedly, the service of ‘Scientific and Technical Consultancy’ was brought under the net of the service tax on 16.07.2001. It is also not disputed that the NRL issued a letter of intent to the respondent assessee in respect of the work in question on 10th of August 2000 i.e. much before the service was brought under the net of service tax. It is also not disputed that 4 the advance payment of Rs. 1.03 lakhs, (after aforesaid letter of intent was issued by the NRL to the respondent assessee) was made before 16.07.2001 i.e. before the service was brought under the net of service tax. However, the dispute relates to the fact as to whether actual service was provided before said date or thereafter, and if so, whether on the service so provided the respondent assessee is liable to pay service tax, or not? The respondent assessee’s case is that it prepared the report on 10th of July 2001, after completing the project, and as such, no amount of service tax is payable in respect of the service as the work had already been completed before 17.07.2001. On the other hand, Mr. Arvind Vashistha, learned counsel for the appellant–Revenue argued that the actual work order was placed by NRL to IIP in respect of the service in question on 01.08.2001, and the final project report was given by IIP on 4th of October 2001. 6) Having heard learned counsel for the parties and after going through the record, we are clear about the fact that the letter of intent was issued by NRL to IIP (respondent assessee) much before the ‘Scientific and Technical Consultancy’ was brought under the net of service tax. Not only this the payment of Rs. 1.03 lakhs was paid by the customer to the respondent assessee much before the aforesaid date 16.07.2001 i.e. the date of bringing the service under the net of the service tax. No doubt, final project report may have been submitted 5 by the respondent assessee after 16.07.2001, but that by itself does not make the assessee liable to pay the service tax in respect of the service provided prior to 16.07.2001. Also, it is to be kept in mind that nature of service tax is that of an indirect tax, and if the respondent assessee is made to pay service tax in respect of the service already provided by him prior to 16.07.2001, it is not left with option to charge the indirect tax from the customer, as the payment was to be made by the party to the assessee as per the contract only. Accordingly, the question of law stands answered. 7) For the reasons as discussed above, the appeal is dismissed. (Dharam Veer, J.) (Prafulla C. Pant, J.) Dt. September 05, 2008. H. Negi 6