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TMI Blog2017 (4) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... cuting agency for construction/up-gradation/commissioning of the project - The appellants are neither the owner of the constructed roads nor do they construct the road themselves. They have merely provided the technical capabilities and expertise in the management and supervision of projects relating to construction of roads, for which they have received the agency fees. It is also clear from the Tripartite Agreement that the agency fee did not include the cost of road construction, materials or charges for the labour. It is also clear from the Clause 11.2 of the agreement that M/s. IRCONs fee covers the cost of the preparation of DPR, cost involved in inviting and deciding tenders but the cost does not covers the cost of advertisement of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long 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 that M/s. IRCON International Ltd. was selected by the Govt. of India for construction/commissioning and maintenance of the project roads as per PMGSY guidelines in Bihar. He further stated that prior to July, 2012 their activities were not chargeable to service tax. However, after issuance of Mega Notification No.25/2012 Entry No.13 of the said Notification provides exemption for the construction of roads. He further stated that agency fee was part of the project cost a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 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 PMGSY Guidelines. The IRCON shall establish a Main Project Office at Patna or any other Central location in the State and intimate Bihar Rural Roads Development Agency (BRRDA) and National Roads Development Agency (NRRDA), which is an Agency of Ministry of Rural Development. 9.0. Release of Funds 9.1. For un-interrupted/successful execution as agreed by the Government of Bihar, Ministry of Rural Development shall release funds directly to the IRCON, in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 cover the cost of preparation of the DPR, cost involved in inviting (excluding cost of advertisement of tenders in newspapers) and deciding tenders, all administrative and project management expenses including deployment of the Teams for execution of the project work, and the first and second levels (project level counterpart) of quality/monitoring as per PMGSY Guidelines. The IRCON would intimate the SQC of the BRRDA and NRRDA of the quality monitoring arrangements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistance 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 provided the technical capabilities and expertise in the management and supervision of projects relating to construction of roads, for which they have received the agency fees. It is also clear from the Tripartite Agreement that the agency fee did not include the cost of road construction, materials or charges for the labour. It is also clear from the Clause 11.2 of the agreement that M/s. IRCON's fee covers the cost of the preparation of DPR, cost involved in inviting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 tripartite agreement. 11. In view of the above, we find that the order of the Commissioner suffers from no infirmity as far as the demand of service tax and interest thereon is concerned. 12. The appellant have also argued that in similar case M/s. Ircon International Ltd. Vs. Commr. Of C.Ex. Mumbai-IV, the Principal Bench held that the service provided by them does not fall in the consulting engineer service. In the said case, from terms and conditions of the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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