Composite turnkey contracts cannot be split into consultancy tax; extended limitation needs proof of suppression or intent to evade.

A composite EPC/turnkey construction contract cannot be vivisected to tax a notional consultancy component as Consulting Engineer's Service when the contractor undertakes the project end-to-end with materials, labour, subcontracting, quality control and completion. Where the fee is only the profit margin embedded in a works contract, the dominant nature of the transaction remains construction, not consultancy. On limitation, the extended period is unavailable without positive evidence of wilful suppression, fraud or intent to evade; mere non-registration or non-payment is insufficient when the relevant records are available in the books and financial statements.

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Issues: (i) whether the appellant's turnkey construction activities were classifiable as Consulting Engineer's Service and whether the Revenue could vivisect the composite contract to tax only the so-called consultancy fee; (ii) whether the extended period of limitation was invocable on the facts of the case.

Issue (i): whether the appellant's turnkey construction activities were classifiable as Consulting Engineer's Service and whether the Revenue could vivisect the composite contract to tax only the so-called consultancy fee.

Analysis: The contracts showed execution of construction projects on EPC/turnkey basis, with the appellant responsible for the work end-to-end, including materials, labour, subcontracting, quality and completion. The consideration was structured as cost plus fee, but the fee represented profit margin for execution of the composite project and not consultancy charges. The Revenue relied on a partial attribution of value, but the nature of the agreement and the documentary record showed a composite works contract. A composite contract cannot be split to isolate a portion and classify it under Consulting Engineer's Service when the dominant nature of the transaction is construction.

Conclusion: The demand under Consulting Engineer's Service was not sustainable and the issue was decided in favour of the assessee.

Issue (ii): whether the extended period of limitation was invocable on the facts of the case.

Analysis: The appellant's activities were construction works of the kind which were treated as exempt or outside the alleged levy on the Revenue's own case. The records were available in the books and financial statements, the tax was not collected from customers, and no specific material showed wilful suppression, fraud or intent to evade. Mere non-registration or non-payment, without positive evidence of suppression with intent, was insufficient to sustain invocation of the extended period.

Conclusion: The extended period of limitation was not invocable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned demand and order were unsustainable both on classification and on limitation, so the appeal succeeded with consequential relief as permissible in law.

Ratio Decidendi: A composite turnkey works contract cannot be vivisected to tax a notional consultancy component under a different service entry, and the extended period cannot be invoked without positive evidence of suppression or intent to evade.

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