Order Date: 24 August 2022

Facts-

• The Respondent Company Jyoti Limited was engaged in the manufacture of mechanical, engineering and electrical goods falling under Chapters 84 and 85 of Central Excise Tariff Act, 1985.
• The respondent merely sold their products and at request of certain buyer, the Respondent 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.
• The Appellant, Revenue issued a show cause notice for the period July, 1997 to December, 2000 and raised demand order against the Respondent  proposing demand of duty 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.
• Thereafter, Tribunal has allowed the said appeals preferred by the respondent and set aside the demand of duty and penalty as per the Revisional Authority’s order.
• Revenue being aggrieved, has preferred the present appeals.

Issue-

• Whether the assessee is liable to pay Service tax on the ‘works contract’ or the contract rendering services as consulting engineer?

Order-

• The Supreme Court of India observed that considering the various services rendered by the Respondent 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 Respondent cannot be said to be rendering the services as a consulting engineer and therefore liable to pay the service tax.
• The Court held that no error has been committed by the learned Tribunal 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.
• Hence the appeals filed by the Revenue fail and the same deserve to be dismissed and decided against Revenue.