TaxTMI 
TaxTMI 
2017 (4) TMI 903
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....n Bihar under Pradhan Mantri Gram Sadak Yojna (PMGSY). They received agency fee @10 percent of the total project cost. This was over and above the project cost received by them. The Revenue issued Show Cause Notice demanding service tax on the agency fee received by the appellants treating the services rendered by the appellants as Consulting Engineer Service, for which they received agency fee of 10 percent. The demand was adjudicated and confirmed by the Commissioner along with interest and penalty of equivalent amount under Section 78 of the Finance Act, 1994 besides penalties under Section 77 and penalty under Sections 66,67 and 68 of the Act for failure to maintain records. 2. Ld. Advocate appearing on behalf of the appellant submits ....
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.... fee received by M/s. IRCON is bundled alongwith the cost of road project or is a separate fee received by them for providing consulting engineer service. The admitted facts are that there was a Tripartite Agreement dated 31.08.2004 for the construction/up-gradation/commissioning and maintenance of different road projects in the state of Bihar under PMGSY. Under the agreement, IRCON was selected as executing agency for construction/up-gradation/commissioning of the project. The following clauses of the above agreement are relevant for interpretation of the issue at hand: 1.0" Executing Agency 1.1. The IRCON shall be responsible for taking all actions required of an Executing Agency for districts under its charge as stipulated in the PMG....
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....maintenance) and will be borne by the Ministry of Rural Development. Project cost means all expenditure incurred as per PMGSY Guidelines from the commencement of the work contract to its completion. The fee shall be paid in installments, 2.0% of the total of the district allocation on signing of this Agreement and the Government of Bihar intimating IRCON the list of read works. Three-fourth of the balance fee calculated on the basis of awarded works shall be released in quarterly instalments based on percentage of financial progress determined in accordance with criteria already laid down by NRRDA. The remaining One-fourth shall be released annually in five equal sub-instalments during the maintenance period. 11.2. IRCON's fee shall ....
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....cal assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub-clause." 8. From the tripartite agreement, we find that the activity of appellants, by virtue of the tasks handled by them, is in nature of technical assistance, and squarely falls in the definition of Consulting Engineer under Section 65(31) ibid. We also find that the activity performed by the appellant is technical assistance in the form of supervising the contract and ensuring of execution of the project by way of getting the same constructed through contractors. The appellants are neither the owner of the constructed roads nor do they construct the road themselves. They have merely provide....
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....f road. There was no amount under Capital Work in Progress. All this indicates that the appellant had not constructed the roads, but the roads were constructed by the different contractors after successful bidding process of tenders invited by the appellants on behalf of the Govt. of Bihar. 10. We find that an other agency M/s. National Projects Construction Corporation Ltd., which has also undertaken identical project of consultancy/ management for the construction of rural road under PMGSY under similar arrangement, received consultancy fee @10% of the total cost of the projects assigned to them and they paid service tax. Another Govt. of India enterprise, M/s. National Hydro Power Corporation also paid service tax under identical tripar....