2013 (7) TMI 459 - AT - Service Tax

Management Consultancy Service - the appellant has been paying service tax on the advisory services under the category of Banking and Other Financial Services and the department has accepted the same Hel that - Department cannot demand service tax for the previous period on the very same activity under the category of Management Consultancy Services advisory and due diligence services on acquisition of shares in listed companies rendered to an existing organization cannot be considered to be Management Consultancy Service in relation to developing or upgrading of any working system in any organization - relying upon the judgement of HSBC Securities & Capital Markets (I) Pvt. Ltd. vs. Commissioner of Service Tax,(2008 (6) TMI 159 - CESTAT MUMBAI). Waiver of pre deposit strong case in the favour of the assessee requirement of pre deposit waived stay granted appeal decided in the favour of the assessee.

Summary

Issues:
Classification of services for service tax purposes - Banking and other financial services vs. Management Consultancy Service, Time bar on demand due to alleged suppression, Interpretation of terms 'management consultant' and 'body corporate' in relation to service tax liability.

Analysis:

1. Classification of Services for Service Tax Purposes:
The appellant, a credit rating agency, registered for service tax purposes under 'Credit Rating Agency', also provides financial advisory services in various sectors. The dispute arose when a show cause notice demanded service tax under 'Management Consultancy Service' for the period 1999-2000 to 2001-02. The appellant argued that they were under the bona fide belief that advisory services were not taxable based on a circular. The appellant contended that the services provided did not relate to the management of any organization. The Tribunal analyzed the agreements and held that the services provided by the appellant did not fall under 'Management Consultancy Service' but were more akin to advisory and due diligence services, which were not taxable under this category.

2. Time Bar on Demand due to Alleged Suppression:
The appellant argued that since there was no allegation of suppression in the show cause notice, the demand was time-barred. The Tribunal did not delve deeply into this issue as it primarily focused on the classification of services for service tax purposes. However, the absence of suppression allegations could have impacted the validity of the demand if the primary issue was not resolved in favor of the appellant.

3. Interpretation of Terms 'Management Consultant' and 'Body Corporate' for Service Tax Liability:
The appellant's counsel highlighted the definition of 'management consultant' and argued that the services provided did not fall within this definition. The Tribunal agreed with this interpretation, emphasizing that the services rendered by the appellant were not related to developing or upgrading the working system of any organization. This interpretation was supported by previous Tribunal decisions, further strengthening the appellant's case for waiver from pre-deposit of the dues adjudged.

In conclusion, the Tribunal granted unconditional waiver from pre-deposit of the dues adjudged against the appellant and stayed recovery during the pendency of the appeal, acknowledging the strong case made by the appellant regarding the classification of services and the absence of tax liability under 'Management Consultancy Service' for the services provided.