COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VADODARA versus M/S JYOTI LIMITED AND ORS. on 24 August 2022

1. Feeling aggrieved and dissatisfied with the impugned commonjudgment and order passed by the Customs, Excise and Service TaxAppellate Tribunal, Ahmedabad passed in orders in Appeal Nos. 3085 to3087 of 2007 by which the learned Tribunal has allowed the said appeals A

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Apreferred by the respondent assessee (by a majority) and set aside thedemand of duty and penalty as per the Revisional Authority’s order, theRevenue 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 theBrespondent – 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 asconsulting engineer and therefore liable to pay the service tax.

2.1 At this stage, it is required to be noted that the respondent -Cassessee company was engaged in the manufacture of mechanical,engineering and electrical goods falling under Chapters 84 and 85 ofCentral Excise Tariff Act, 1985. In respect of certain buyers, the assesseemerely sold their products. In respect of certain buyers, at their request,the assessee had undertaken, at the customer’s site, certain activitieslike construction, civil works including installation, erection andDcommissioning of machinery to the specific requirements of thecustomers. They collected amounts billed variedly as charges towardserection, testing and calibrations, installation and commissioning,construction activities etc. In respect of some other buyers, they procuredsome accessories and miscellaneous goods from other manufacturersEor open market and in such cases collected the price from their customersfor supply of the said bought out items. According to the Revenue theassessee collected a sum of Rs.36,95,14,983/- towards post clearingactivities relating to the aforesaid period on which the assessee wasliable to pay the service tax of Rs.1,84,75,749/-. The original authoritydropped the show cause notice on considering the various contracts andFopined that the services rendered by the assessee cannot be said to berendering services of consulting engineering.

2.2 The Commissioner took up the order by way of suo motorevision and held that the services rendered by the assessee can be saidto be rendering of services of the nature of “advice”, “consultancy” orG“technical assistance” while executing the works contract and thereforecan be said to be services of consulting engineer and were liable to paythe service tax.

2.3 The order passed by the Commissioner was the subject matterof appeals before the learned Tribunal. There was a difference of opinionH

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 wasjustified in dropping the proceedings/show cause notice/demand. Thematter was referred to the third member. The third member opined toset aside the order passed by the Commissioner in suo moto revisionand held that the services rendered by the assessee cannot be said to beservices rendered as Consulting Engineer and therefore not liable to paythe service tax.

2.4 Feeling aggrieved and dissatisfied with the majority view/decision of the Tribunal holding that the services rendered by the assesseecannot be said to be Consulting Engineer and therefore the assessee isliable to pay service tax, the Revenue has preferred the present appeals.

3. We have heard Shri A.K. Panda, learned Senior Advocateappearing on behalf of the Revenue and Mrs. Nisha Bagchi, learnedAdvocate, appearing on behalf of the assessee - respondents. We havegone through and considered the Order-in-Original passed by the DeputyCommissioner dropping the demand and show cause notice as well asthe order passed by the learned Commissioner passed in Revision/Reviewand also the impugned orders passed by the Tribunal.

4. Having gone through the order passed by the Commissionerconfirming the demand of service tax it appears that the Commissionerconfirmed the demand of service tax merely on the ground that servicesrendered by the assessee can be said to be services rendered as ConsultingEngineer and therefore liable to pay the service tax. However, consideringthe various services rendered by the assessee like erection/installation/commissioning of goods at customers’ site and incidentally they mayalso be providing the services of drawing, design etc., it cannot be saidthat the services rendered by the assessee was as a consulting engineer.The contract can be said to be ‘works contract’. Hence, the assesseecannot be said to be rendering the services as a consulting engineer andtherefore liable to pay the service tax. Therefore, once, the assessee atthe relevant time cannot be said to be consulting engineer and/or renderingservices as a consulting engineering the assessee is not liable to pay theservice tax on the ‘works contract’ or the contract rendering services asconsulting engineer for the period under consideration namely July, 1997to December, 2000. No error has been committed by the learned Tribunal AB

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Ain setting aside the order passed by the Commissioner and restoring theOrder-in-Original passed by the Deputy Commissioner dropping the showcause notice and demand of service tax and penalty considering thenature of services rendered by the assessee. We are in completeagreement with the view taken by the Tribunal.

B4.1 In view of the above discussion and for the reasons statedabove all the appeals filed by the Revenue fail and the same deserve tobe dismissed and are accordingly dismissed.

In the facts and circumstances of the case, there shall be no orderas to costs.

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Bibhuti Bhushan Bose

Appeals dismissed.

(Assisted by : Rakhi, LCRA)

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