2013 (1) TMI 143 - AT - Service Tax

Waiver and stay of demand - Extended period of limitation - Suppression of value of taxable service - Section 73(1) of the Finance Act, 1994 - Management consultant service Exempted services other than exports - Assessee was required to provide customized software and infrastructure to conduct tests at different designated test centers in India Held that - The entire amount was included by the assessee in their ST-3 returns, albeit as non-taxable. They also declared in their returns that these amounts were based on their books of accounts. At the stage of audit objection, they produced these books of accounts including the agreement, which was in July, 2006. Nevertheless, the show-cause notice came to be issued only in June 2008. This delay is not satisfactorily explained in the show-cause notice or in the Order-in-original. Waiver of pre-deposit and stay of recovery allowed

Summary

Issues:
- Waiver and stay of demand for service tax and education cess
- Penalties imposed under Finance Act, 1994
- Alleged suppression of value of taxable service
- Interpretation of the definition of 'management consultant'

Waiver and Stay of Demand:
The appellant sought waiver and stay of an amount demanded towards service tax, education cess, and penalties under the Finance Act, 1994. The demand was related to 'management consultant's service' provided to Birla Institute of Technology and Science (BITS) under an agreement. The appellant was required to provide customized software and infrastructure for conducting tests at various test centers for BITS. The demand was based on amounts not included in the gross taxable value in the relevant returns for the period in dispute.

Alleged Suppression of Value of Taxable Service:
The show-cause notice was issued invoking the extended period of limitation under the Finance Act, 1994, alleging suppression of the value of taxable service. The appellant contended that the material information was provided to the Department in 2006, making the demand raised in 2008 time-barred. The dispute revolved around the reckoning of the period of limitation with reference to the due date for filing returns.

Interpretation of 'Management Consultant':
The substantial issue revolved around the interpretation of the definition of 'management consultant' under the Act. The appellant argued that the amounts collected from BITS, Pilani, other than the specified fee, were not consideration for services falling under the definition of 'management consultant'. The authorities below had found suppression of value, but the findings were not clear on whether the amounts collected were for services falling under the definition of 'management consultant'. The appellant's inclusion of the entire amount in their returns as non-taxable, based on their books of accounts, raised questions about the delay in issuing the show-cause notice in 2008 despite the information being provided in 2006.

In conclusion, the Tribunal found that the demand was based on suppression of value, and the question was whether the amounts collected were for services falling under the definition of 'management consultant'. The lack of clarity in the findings and the delay in issuing the show-cause notice raised concerns about the limitation period. Consequently, the Tribunal granted waiver of predeposit and stay of recovery for the adjudged dues in favor of the appellant.