Facts:
The petitioner received a clarification from the Commissioner of Central Excise on 27.03.1998 which stated that valuers of immovable property (other than agricultural lands, plantations, forests, mines and quarries) and valuers of plant and machinery are consulting engineer services leviable to service tax. The petitioner’s contentions were as under: Valuation broadly means assessing worth of any tangible or intangible assets. Following principles are applied for the purpose of valuation:
- Supply and demand
- Competition
- Substitution
- Assessment of circumstances having a direct or indirect nexus on the degree of utility and productivity of an asset
- Assessment of market forces
- Relative purchasing power of money
- Technological advancement or changes etc.
There is no legislation to regulate the profession of valuation. However, under Wealth Tax Act, 1957, the valuation can be carried out by a person registered with the Central Government u/s. 34AB of the said Act read with Rule 8A of the Wealth Tax Rules, 1957. One such person is defined to be a graduate in civil engineering and therefore, the respondent levied service tax on valuer services. However, valuation is not recognised as a discipline of engineering and the services can be provided by a number of professionals. The very fact that persons having other qualifications can also render valuer services is sufficient to conclude that valuation is not a discipline of engineering. Valuation requires knowledge of law, economics, accountancy, town planning, environmental science etc. Graduate in any stream is eligible for admission to the said course. Valuation is not a discipline of engineering and therefore, the services cannot be leviable to service tax under “consulting engineer services” even if the services are rendered by an engineer. The services are not in the nature of advice, consultancy or technical assistance in common parlance and therefore, when valuer services are provided by a consulting engineer, it is an unreasonable restriction on the fundamental right of the petitioner to carry on their profession and therefore, the levy is unconstitutional.
According to the respondent, provisions of Rule 8A of the Wealth Tax Rules, 1957 suggests that a graduate in civil engineering could become a registered valuer and the services provided by a valuer of immovable property or plant and machinery is a highly technical job. Further, prospectus of a university states that the course is imparted by the faculty of engineering and technology. The course content is mostly in the field of engineering. Reliance is placed on the judgment in case of V. Shanmughavel vs. Commissioner of Central Excise, Chennai – II 2001 (131) ELT 14 (Mad) wherein it was observed that vide Wealth Tax Laws, the person should hold a degree of engineering and should be a high standard engineer. Further, the services are in the nature of advise, consultancy or technical assistance and therefore, are liable to service tax as “consulting engineer’s services”. Therefore, when an engineer becomes a registered valuer of immovable property or plant and machinery, he is rendering consulting engineer’s services.
Held:
Vide Rules 8A of the Wealth Tax Rules, 1957, the qualifications prescribed for each category of valuers are different. The provisions with respect to valuation of immovable property and plant and machinery, allow an engineer to be a registered valuer. However, being an engineer is not a condition precedent for being eligible to be a registered valuer. The syllabus of valuer contains general subjects and subjects pertaining to engineering are limited. Valuation services rendered by a person, not being an engineer, is not consulting engineer’s services. Further, valuation services rendered by an engineer is also not leviable to service tax under “consulting engineer’s services” since there is no advise, consultancy or technical assistance involved in the said activity and it is not in relation to any discipline of engineering. Services rendered by the petitioner as valuer is not leviable to service tax as “consulting engineer’s services”.
