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Issues involved: Interpretation of service tax liability u/s "Management consultancy" for services provided under an agreement.
Summary: The appellant, Glaxo Smithkline Consumer Healthcare Ltd., entered into an agreement with their group company, appointing the appellant as a non-exclusive agent to sell products. The issue arose when "business auxiliary service" was brought under service tax in July 2003. The appellant claimed they were not liable for service tax, but subsequent adjudication orders held them liable under "Management consultancy" service. The appellant appealed against this order. During the hearing, the appellant cited a previous Tribunal order where similar services were classified as "business auxiliary service." The Tribunal analyzed various costs incurred by the appellant and concluded that the services provided did not fit the definition of "Management Consultancy Service." Instead, they were more aligned with "business auxiliary service." As a result, the levy of service tax on staff costs under "Management Consultancy Service" was deemed incorrect. The Tribunal found that the appellant's services fell under "business auxiliary service" from July 2003, and the tax was correctly paid. Therefore, no demand or refund was necessary. The appeal was ordered accordingly, setting aside penalties and demands for tax and interest. In conclusion, the Tribunal clarified the classification of the appellant's services under the service tax regime, determining that they aligned more with "business auxiliary service" rather than "Management Consultancy Service."
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