Services for property valuation taxable

Relying on the ratio of Madras high court judgement in the case of 2003-Taxindiaonline-61-HC-MAD-ST; the Central Excise and Service Taxes Appellate Tribunal (Cestat) has held that when an 'engineer' becomes a 'registered valuer' of immovable property or plant and machinery, he is obviously rendering the service as a 'consulting engineer.'

Since this position has been analysed by the Madras high court, the Cestat accepted the plea of the Revenue side, and accordingly held that services rendered by the appellant, as valuer of immovable property would be liable to pay service tax under the Finance Act, 1994 as a consulting engineer.

In the case of V Shanmughavel Vs. Commissioner of Central Excise, 2003-Taxindiaonline-61-HC-MAD-ST, the Madras high court has held: "Wherever an advice is given by an engineer on the basis of his engineering knowledge, skill and experience, then such an advice would be in the realm of 'engineering advice' or at least pertaining to the 'engineering discipline'."

However, it was held that even adopting the strict view of a taxing statute, it would have to be held that the advice offered by an engineer on the basis of his engineering knowledge in respect of immovable property valuation would certainly amount to an advice which is integrally connected with the 'engineering discipline.'

The Commissioner (Appeal) had held that "the task undertaken by a valuer is basically in the nature of expression of an opinion. It does not involve any consultancy or technical assistance. The valuation aspect, though has some engineering content in it, involves economic as well as commercial aspects such as market perceptions, real estate conditions etc. It is also seen from the constitution of the Institution of Valuers that, to be a valuer, one need not be an engineer."

"In fact, valuation could be done of any property having no engineering content in it e.g. art objects. Thus, in my view, valuation of immovable property is different from the advice/technical assistance normally rendered by a consulting engineer. In more than one respect, I think the valuer's task is comparable to the architect's task and if the services rendered by an architect are held to be outside the purview of service tax, there is no reason why the services of valuers should be covered within it."

See full text of Judgement in 2004-Taxindiaonline-147-Cestat-Bang in Legal Corner

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