Service tax cannot be levied land valuers as they did not fall within the ambit of services rendered by a consulting engineer.

As per The Times of India report: The Gujarat high court while exempting the property assessors from paying service tax, said that the government cannot levy service tax on land valuers because they are not necessarily consulting engineers.

After the service tax was introduced in 1994 through an amendment in the Finance Act, 1997, tax was imposed on services rendered by a consulting engineer to a client in relation to one or more disciplines of engineering. The government began levying service tax on valuers as consulting engineers at the rate of five per cent on the gross amount charged to the client.

The Gujarat chapter of the Institution of Valuers moved the high court and questioned the validity of the tax on their services on the ground that they did not essentially fall in the category of consulting engineers.

Under the provisions of law, ‘taxable services’ are defined as any service provided by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering, including computer hardware.

The petitioners argued that valuation was not recognized as a discipline of engineering. The service of valuation can be provided by many qualified persons. Valuation requires knowledge of law, economics, accountancy, town planning and environmental science among others. And besides engineering, there are many courses that train people valuation.

The institution also argued that valuation is universally considered a vocational discipline within economics, and not engineering.

Besides, it was also contended that there was no legislation in India to regulate the profession of valuation.

After hearing the case at length, a division bench of justices H N Devani and R M Chhaya concluded that the services rendered by valuers did not fall within the ambit of services rendered by a consulting engineer as defined under the Finance Act. With this, the bench has restrained the government from levying the tax from valuers.