/2022 INSC 0744/
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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
orders   in   Appeal   Nos.   3085   to   3087   of   2007   by   which   the

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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

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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

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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.

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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

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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

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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