2012 (12) TMI 906 - AT - Service Tax

Management Consultancy Service - 65(105)(r) - Telecommunication services Whether liaison work was service within the meaning of Management Consultancy Service Held that - The inclusive portion of a definition cannot restrict the meaning of the means part of the definition which defines the general meaning. However the every name of the service indicates that the entry is meant to cover only consultancy service or advisory service and not all activities got done by management through others Therefore liaison work is not in the nature of any consultancy or advice. But only one of the temporary functions that was required for the functioning of the company. If a person does the activity of collecting of debts of a company that person cannot be considered to be doing management consultancy service though debt collection is a responsibility of the management. In favour of assessee

Summary

Issues:
1. Whether liaison charges received by the appellant are taxable under "Management Consultancy Service" as per section 65(105)(r) of the Finance Act, 1994.

Analysis:
The appellant, registered for "Management Consultancy Service," was found not paying service tax on liaison charges received from clients during an audit for the years 2000-01, 2002-03. The revenue contended that liaison work falls under "Management Consultancy Service" as defined in section 65(65) of the Finance Act, 1994. The appellant's interaction with a client for negotiating agreements was considered taxable. A show cause notice was issued, demanding service tax. The appellant argued that liaison work is not consultancy but an executory task, not falling under "Management Consultancy Service." The appellant cited various decisions supporting their argument.

The revenue argued that liaison work is connected with managing an organization and thus taxable under section 65(65). The revenue sought time to study appellant's cited decisions but was denied. The Tribunal noted that the definition's inclusive portion should not expand the "means part" beyond consultancy or advisory services. Liaison work was deemed a temporary function necessary for the company's operation, not falling under management consultancy. Drawing from the cited decisions, the Tribunal concluded that liaison work does not constitute "Management or Business Consultancy" taxable under section 65(105)(r) of the Finance Act, 1994.

The Tribunal set aside the order confirming the demand for service tax, ruling in favor of the appellant.