2013 (9) TMI 710 - AT - Service Tax

Business auxiliary services sharing of cost - appellant and M/s BWIL agreed to integrate and jointly carry out day-to-day functions in both the companies in various areas - the agreement was for rendering executory services and for sharing of the cost towards the same - Held that - the terms and conditions of the agreement clearly show that the agreement was for rendering executory services and for sharing of the cost towards the same. Nothing in the said agreement relates or refers to management consultancy services to be rendered by the appellant to M/s BWIL. There is also no evidence led by the Revenue to show that the appellant gave consultancy to M/s BWIL in various field of management. In the absence of such any evidence, it has to be concluded that the agreement between the two parties are for executory services and not for any management consultancy services. - In view of the decision in GLAXO SMITHKLINE PHARMACEUTICALS LTD. Versus C. C. E., MUMBAI-IV 2004 (7) TMI 589 - CESTAT, MUMBAI , decided in favor of assessee.

Summary

Issues:
Classification of services as 'Management Consultancy Services' or 'Business Auxiliary Services'; Invocation of extended period of time for demand beyond normal limitation period.

Analysis:
The appeal involved a dispute regarding the classification of services provided by the appellant to another company as either 'Management Consultancy Services' or 'Business Auxiliary Services'. The appellant, a pharmaceutical company, had entered into an agreement with another company for integration and joint execution of various day-to-day functions. The department alleged that the services rendered amounted to 'Management Consultancy Services' and issued a show-cause notice for Service Tax. The lower appellate authority upheld the demand, leading to the appellant's appeal before the tribunal.

The appellant argued that a previous tribunal decision had classified similar services as 'Business Auxiliary Services' instead of 'Management Consultancy Services'. They contended that the current services should also be classified similarly, especially since the department had issued a show-cause notice for the earlier period. The appellant claimed that the demand for the subsequent period should not be allowed beyond the normal limitation period.

The Revenue, represented by the Addl. Commissioner, countered the appellant's argument by highlighting differences in the present agreement compared to the previous tribunal decision. They emphasized that the agreement covered a wide range of activities, distinct from the previous case, and justified the lower appellate authority's decision to uphold the demand.

Upon careful consideration, the tribunal examined the agreement between the parties and concluded that the services provided were for executory services and cost-sharing, not for management consultancy services. The tribunal found no evidence of consultancy services being rendered by the appellant to the other company. Citing a previous decision in the appellant's favor, the tribunal allowed the appeal, stating that the earlier decision's ratio applied to the current case. The tribunal noted that the appeal against the previous decision had been dismissed by the Bombay High Court, making the decision final.

In conclusion, the tribunal allowed the appeal, providing consequential relief based on the decision's findings and the previous tribunal ruling that the services did not constitute 'Management Consultancy Services'.