Summary
A manufacturer of mechanical and electrical goods also undertook, at some customers' request, erection, installation, commissioning and civil work at their sites, sometimes with incidental drawing and design. Revenue sought about Rs. 1.85 crore in service tax for July 1997 to December 2000 on the footing that this was 'consulting engineer' service. The original authority dropped the demand, but the Commissioner revived it in suo motu revision. On a split, the Tribunal's third member set the demand aside. The Supreme Court dismissed Revenue's appeals. Erection, installation and commissioning at customers' sites, even with incidental drawing and design, amount to a works contract, not consulting engineer service, so no service tax was payable under that head for the period.
Issues
- Whether erection, installation and commissioning of machinery at customers' sites, with incidental drawing and design, by a manufacturer amounted to 'consulting engineer' service liable to service tax for July 1997 to December 2000
Held
- The assessee's activities of erecting, installing and commissioning goods at customers' sites, incidentally including drawing and design, made the contract a works contract. They were not services rendered as a consulting engineer. (¶¶ 2.1, 4)
- Since the assessee was not rendering consulting engineer service in the period, it was not liable to service tax under that head. The Tribunal rightly set aside the Commissioner's revisional order and restored the order dropping the demand and penalty. (¶¶ 4, 4.1)
Result
Revenue's appeals dismissed; the Tribunal's majority decision setting aside the service tax demand and penalty was upheld; no order as to costs.