COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE vs. M/S. JYOTI LIMITED AND ORS.

1 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 J U D G M E N T M. R. Shah, J. 1. Feeling   aggrieved   and   dissatisfied   with   the   impugned common judgment and order passed by the Customs, Excise and   Service   Tax   Appellate   Tribunal,   Ahmedabad   passed   in Signature Not Verified Digitally signed by R Natarajan Date: 2022.08.24 17:14:55 IST Reason: orders in Appeal Nos. 3085 to 3087 of 2007 by which the 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