Commissioner of Customs and Central Excise Vadodara vs M/S. Jyoti Limited and Ors.

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4721 – 4723 of 2008

Commissioner of Customs and Central Excise Vadodara – I .. Appellant

Versus

M/s Jyoti Limited and Ors. .. Respondents

JUDGMENT

M. R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned

common judgment and order passed by the Customs, Excise

Signature Not Verified Digitally signed by R and Service Tax Appellate Tribunal, Ahmedabad passed in Natarajan Date: 2022.08.24 17:14:55 IST

orders in Appeal Nos. 3085 to 3087 of 2007 by which the Reason:

2

learned Tribunal has allowed the said appeals preferred by the

respondent assessee (by a majority) and set aside the demand

of duty and penalty as per the Revisional Authority’s order, the

Revenue has preferred the present appeals.

2. The dispute is with respect to the period July, 1997 to

December, 2000. A show cause notice dated 04.06.2001 was

issued against the respondent – assessee, proposing demand

of duty (service tax demand) of Rs.1,84,75,749/­ and

proposing the imposition of penalty on the grounds, inter alia,

that the assessee is providing the services to its customers as

consulting engineer and therefore liable to pay the service tax.

2.1 At this stage, it is required to be noted that the

respondent ­ assessee company was engaged in the

manufacture of mechanical, engineering and electrical goods

falling under Chapters 84 and 85 of Central Excise Tariff Act,

1985. In respect of certain buyers, the assessee merely sold

their products. In respect of certain buyers, at their request,

the assessee had undertaken, at the customer's site, certain 3

activities like construction, civil works including installation,

erection and commissioning of machinery to the specific

requirements of the customers. They collected amounts billed

variedly as charges towards erection, testing and calibrations,

installation and commissioning, construction activities etc. In

respect of some other buyers, they procured some accessories

and miscellaneous goods from other manufacturers or open

market and in such cases collected the price from their

customers for supply of the said bought out items. According

to the Revenue the assessee collected a sum of

Rs.36,95,14,983/­towards post clearing activities relating to

the aforesaid period on which the assessee was liable to pay

the service tax of Rs.1,84,75,749/­. The original authority

dropped the show cause notice on considering the various

contracts and opined that the services rendered by the

assessee cannot be said to be rendering services of consulting

engineering.

2.2 The Commissioner took up the order by way of suo moto

revision and held that the services rendered by the assessee 4

can be said to be rendering of services of the nature of

"advice", "consultancy" or "technical assistance" while

executing the works contract and therefore can be said to be

services of consulting engineer and were liable to pay the

service tax.

2.3 The order passed by the Commissioner was the subject

matter of appeals before the learned Tribunal. There was a

difference of opinion between the members of the Tribunal.

The Member (Technical) confirmed the demand of duty and

interest and also the penalty. However, the Member (Judicial)

disagreed with the view taken by the Member (Technical) and

was of the opinion that the Deputy Commissioner was justified

in dropping the proceedings/show cause notice/demand. The

matter was referred to the third member. The third member

opined to set aside the order passed by the Commissioner in

suo moto revision and held that the services rendered by the

assessee cannot be said to be services rendered as Consulting

Engineer and therefore not liable to pay the service tax. 5

2.4 Feeling aggrieved and dissatisfied with the majority

view/decision of the Tribunal holding that the services

rendered by the assessee cannot be said to be Consulting

Engineer and therefore the assessee is liable to pay service

tax, the Revenue has preferred the present appeals.

3. We have heard Shri A.K. Panda, learned Senior Advocate

appearing on behalf of the Revenue and Mrs. Nisha Bagchi,

learned Advocate, appearing on behalf of the assessee ­

respondents. We have gone through and considered the

Order­in­Original passed by the Deputy Commissioner

dropping the demand and show cause notice as well as the

order passed by the learned Commissioner passed in

Revision/Review and also the impugned orders passed by the

Tribunal.

4. Having gone through the order passed by the

Commissioner confirming the demand of service tax it appears

that the Commissioner confirmed the demand of service tax

merely on the ground that services rendered by the assessee 6

can be said to be services rendered as Consulting Engineer

and therefore liable to pay the service tax. However,

considering the various services rendered by the assessee like

erection/installation/commissioning of goods at customers’

site and incidentally they may also be providing the services of

drawing, design etc., it cannot be said that the services

rendered by the assessee was as a consulting engineer. The

contract can be said to be ‘works contract’. Hence, the

assessee cannot be said to be rendering the services as a

consulting engineer and therefore liable to pay the service tax.

Therefore, once, the assessee at the relevant time cannot be

said to be consulting engineer and/or rendering services as a

consulting engineering the assessee is not liable to pay the

service tax on the ‘works contract’ or the contract rendering

services as consulting engineer for the period under

consideration namely July, 1997 to December, 2000. No error

has been committed by the learned Tribunal in setting aside

the order passed by the Commissioner and restoring the

Order­in­Original passed by the Deputy Commissioner 7

dropping the show cause notice and demand of service tax and

penalty considering the nature of services rendered by the

assessee. We are in complete agreement with the view taken

by the Tribunal.

4.1 In view of the above discussion and for the reasons

stated above all the appeals filed by the Revenue fail and the

same deserve to be dismissed and are accordingly dismissed.

In the facts and circumstances of the case, there shall be

no order as to costs.

…………………………………J. (M. R. SHAH)

…………………………………J. (B.V. NAGARATHNA)

New Delhi, August 24, 2022