The transaction combined goods and services
Diebold entered turnkey arrangements with banks to supply, install and commission ATMs. The Revenue sought to tax the installation and commissioning element under the Finance Act, 1994. The central question was whether the contracts could legally be split for that purpose during the particular period. It was not enough that an installation activity could be described in ordinary commercial terms. The levy needed a statutory foundation for the composite transaction. (Paragraphs 20–22 and 40.)
A valuation method cannot create a tax charge
The Court separated the charging provision from machinery that measures an existing liability. Assigning a percentage of the contract price to installation could not, by itself, create a taxable event not recognised by the applicable charging provisions. This distinction explains why a dispute over the proportion of the price could not cure the more basic absence of authority to split the contract in the first place. (Paragraphs 20–22.)
Why the later works-contract entry mattered
A distinct works-contract service entry and associated valuation arrangements arrived on 1 June 2007. The Court treated that legislative development, and the authority in Larsen and Toubro discussed in the judgment, as supporting its reading of the earlier regime. The introduction of specific machinery was not treated as unnecessary duplication of an already complete power to tax every indivisible contract under earlier service headings. (Paragraphs 25–36.)
The result and its historical boundary
The tribunal’s order was left undisturbed and the appeals dismissed. The relevant period—July 2003 to April 2006—is essential to the answer. This is not a ruling that ATM installation can never attract tax or that the same analysis automatically governs GST. Readers comparing another dispute need to identify the statutory period, the nature of the consideration and whether the contract is genuinely indivisible. (Paragraphs 40–41.)
A question this judgment answers
Could the Revenue fix a percentage for installation and thereby create liability?
No. The Court held that valuation machinery could not supply a charging authority absent from the law governing the relevant composite contracts. (Paragraphs 20–22 and 40.)
Lawyers and appearances recorded by SCR
The following retains the source’s grouping and designations. It does not establish each lawyer’s role in every connected proceeding.
- Adv. for the Appellant(s):
- Gurmeet Singh Makker.
- Advs. for the Respondent(s):
- Ms. Charanya Lakshmikumaran, Ms. Nitum Jain, Ms. Neha Choudhary, Ms. Medha Sinha, Swastik Mishra, Yashovardhan Singh, Adithya Nair, L Badri Narayanan, M. P. Devanath, Ms. Ananya Gupta.
Procedural origin recorded by SCR
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 4708-4711 of 2008
From the Judgment and Order dated 28.11.2007 of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai in AN Nos. 126, 130, 149 of 2006 and AN Nos. 74 of 2007 and FO Nos. 6, 7, 8, and 9 of 2008