# COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VADODARA - I v. M/S JYOTI LIMITED AND ORS

- **Citation:** [2022] 7 S.C.R. 534
- **Court:** Supreme Court of India
- **Decided:** 2022-08-24
- **Case number:** Civil Appeal Nos. 4721 - 4723 of 2008
- **Bench:** M. R. Shah, B. V. Nagarathna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-customs-and-central-excise-vadodara-i-v-m-s-jyoti-limited-and-36172
- **Pages:** 5

## Headnote

Service Tax - Works Contract - Respondent-assessee company
was engaged in manufacture of mechanical, engineering and
electrical goods falling under Chapters 84 and 85 of Central Excise
Tariff Act - 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 activities
like construction, civil works including installation, erection and
commissioning of machinery to 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 -
Whether assessee-company could be said to be rendering of services
of the nature of "advice", "consultancy" or "technical assistance"
while executing works contract and therefore can be said to be
providing services of consulting engineer and thus liable to pay
service tax - Held: The various services rendered by the assessee
like erection/installation/commissioning of goods at customers' site
and incidental services of drawing, design etc., cannot be said to
be services rendered by the assessee as a consulting engineer -
The contract can be said to be 'works contract' - Therefore,
assessee-company not liable to pay service tax - Central Excise
Tariff Act, 1985 - Chapters 84 and 85.
Dismissing the appeals, the Court
HELD: 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
[2022] 7 S.C.R. 534
534
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535
merely on the ground that services rendered by the assessee
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. [Para
4][537-E-H]

## Text

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SUPREME COURT REPORTS
[2022] 7 S.C.R.
COMMISSIONER OF CUSTOMS AND
CENTRAL EXCISE VADODARA - I
v.
M/S JYOTI LIMITED AND ORS.
(Civil Appeal Nos. 4721 - 4723 of 2008)
AUGUST 24, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Service Tax - Works Contract - Respondent-assessee company
was engaged in manufacture of mechanical, engineering and
electrical goods falling under Chapters 84 and 85 of Central Excise
Tariff Act - 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 activities
like construction, civil works including installation, erection and
commissioning of machinery to 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 -
Whether assessee-company could be said to be rendering of services
of the nature of "advice", "consultancy" or "technical assistance"
while executing works contract and therefore can be said to be
providing services of consulting engineer and thus liable to pay
service tax - Held: The various services rendered by the assessee
like erection/installation/commissioning of goods at customers' site
and incidental services of drawing, design etc., cannot be said to
be services rendered by the assessee as a consulting engineer -
The contract can be said to be 'works contract' - Therefore,
assessee-company not liable to pay service tax - Central Excise
Tariff Act, 1985 - Chapters 84 and 85.
Dismissing the appeals, the Court
HELD: 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
[2022] 7 S.C.R. 534
534
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B
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merely on the ground that services rendered by the assessee
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. [Para
4][537-E-H]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 47214723 of 2008.
From the Judgment and Orders dated 31.07.2007, 20.11.2007,
18.12.2007 No.A/3085 to 3087/WZB/AHD/07 & M/1173 to 1175/WZB/
AHD/2007 of the Customs Excise and Service Tax Appellate Tribunal,
West Zone Bench at Ahmedabad in Appeal No.ST/16 to 18/2004.
A. K. Panda, Arijit Prasad, Sr. Advs., Mukesh Kumar Maroria,
Ms. Diksha Rai, Vatsal Joshi, Vishesh Kalra, B. K. Prasad, Advs. for
the Appellant.
Mrs. Nisha Bagchi, Ms. Shambhavi Singh, Ms. Akansha Saini,
Ms. Sheena Taqui, Dhavnit Chopra, Mrs. Bina Gupta, Shiv Vinayak
Gupta, Ms. Charanya Lakshmikumaran, Ms. Mounica Kasturi, Aditya
Bhattacharya, Ms. Apeksha Mehta, Advs. for the Respondents.
The Judgment of the Court was delivered by
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 orders in Appeal Nos. 3085 to
3087 of 2007 by which the learned Tribunal has allowed the said appeals
COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE
VADODARA - I v. M/S JYOTI LTD.
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SUPREME COURT REPORTS
[2022] 7 S.C.R.
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 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 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
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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.
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 Order-in-Original 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 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
COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE
VADODARA - I v. M/S JYOTI LTD. [M. R. SHAH, J.]
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SUPREME COURT REPORTS
[2022] 7 S.C.R.
in setting aside the order passed by the Commissioner and restoring the
Order-in-Original passed by the Deputy Commissioner 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.
Bibhuti Bhushan Bose
Appeals dismissed.
(Assisted by : Rakhi, LCRA)