Document Fragment View

Matching Fragments

We do not desire to encumber this judgment with a detailed discussion of the large number of clauses of the contract (tender) document and the consortium agreement. But it seems to us that while Sri Ahuja seems to be right in saying that the assessee was concerned only with the civil works section of the project, he has over simplified the part played by the assessee in the execution of the contract. It is not necessary to quarrel with Sri Ahuja's description of the contract as a "turn-key project" which, indeed, was the description given to it by the assessee itself - in para 19 of the application to the Board and in para 2 of the letter dated 17.3.82 - or his consequent suggestion that the foreign government was not interested in. the minute details or working of the contract but only in the final outcome. Still the fact is that the contract executed by the assessee is no ordinary contract. It may be that a good part of the contract was executed by the SCC. But this cannot render the assessee's part insignificant. If the State enterprise itself was a fully expert body capable of completing the entire project on its own, there would have been no need to call for tenders from experienced consortia. The part of the contract entrusted to the assessee was therefore no less significant. The value of the assessee's package in the contract was about ID 153 million as against the total value of the contract estimated at ID 326 millions - more than 40 per cent. The job of the assessee involved survey, soil investigation design, detailed drawings and construction of all civil works and pipelines (other than trunk pipelines). Even these activities involve technical knowledge and expertise. It cannot therefore, be doubted that the assessee, under the contract, had to make use, outside India, of its industrial, commercial and scientific knowledge, experience and skill. Sri Ahuja makes the point that, even if this be so, the assessee made available no information regarding such expertise to the foreign Government. There is equally no doubt that, in executing the contract the assessee has rendered technical services. Any engineering contract involves technical services; more so, a contract of the nature and magnitude involved in the present case. Here again, Sri Ahuja says, no technical services were rendered by the assessee to the foreign Government; the assessee only made use of the technical knowledge, experience and skill of its own employees to perform a task undertaken by it.

44. The perusal of the contract and its various parts very clearly shows that is was contract for commissioning of a turn-key project for the Karkh Water Supply Scheme. It is true that for executing this work, it was absolutely essential for the contractor to have necessary technical competence and they had to use highly experience technical personnel for this purpose. From the very nature of the work, it is clear that the execution of the project involved a high degree of technical competence as well as expertise and experience. However, reading the contract as a whole, the intention of the parties was only to get the whole project being made available on a turn-key basis according to the general specifications laid down by the Baghdad authorities. It is not possible in this contract either to separate one part from the other or to bifurcate a part of consideration for any particular service. We have already considered the various case laws including certain decisions the Hon'ble Supreme Court in the case of Gannon Donkerley & Co. and Ram Singh Engineering Works (supra) which throw light on interpretation on such contracts. Various High Courts have also considered similar questions throwing light on the nature of contracts. Applying these principles, it appears that this is an indivisible and integrated contract for the whole work and has to be treated as such."