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Issues involved: Appeal against demand of service tax under 'Management Consultancy Service' with interest and penalties u/s 75A, 76, 77 & 78 of the Finance Act, 1994.
Summary: Issue 1: Demand of service tax under 'Management Consultancy Service' The appellant appealed against the Order-in-Appeal confirming a demand of service tax under 'Management Consultancy Service' with interest and penalties. The appellant argued that they had not provided Management Consultancy Service but rather undertook specified functions falling under Business Support Service, which was taxable post 1-5-2006. The appellant contended that the demand was time-barred due to a bona fide belief of not providing the service. However, the Revenue supported the demand based on the terms of the agreement. The Tribunal found that as per the agreement terms, the activities undertaken by the appellant were advisory in nature, aligning with the definition of Management Consultancy Services. Therefore, the appeal against the demand was dismissed. Issue 2: Imposition of penalties The appellant alternatively submitted that the penalties imposed were not sustainable. The Revenue relied on specific clauses of the agreement to support the penalties. However, the Tribunal's decision on the demand being upheld under Management Consultancy Service also impacted the penalties issue. As the activities were deemed advisory in nature, there was no infirmity in the impugned order regarding the penalties. Consequently, the appeal against the penalties was also dismissed. This judgment highlights the importance of aligning the terms of agreements with the definitions of services under tax laws, emphasizing the need for clarity and accuracy in service categorization to avoid disputes and penalties.
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