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2013 (11) TMI 551 - AT - Service TaxDemand of service tax - Classification of service - Management Consultancy Service or Business Auxiliary Services - Held that - From the agreement available on record it is seen that SKL is actually undertaking the manufacturing operations and have provided space to SCPL for installation of machinery, etc. In other words, M/s. SKL is actually managing the operations of the SCPL by employing their own staff. There is a difference between manager and managing consultant . While manager actually manages the things, a consultant provides consultancy/advice as to how to manage. Both are not the same. Therefore, we find that the reasoning adopted by the lower appellate authority in the impugned order for coming to the conclusion that recipient did not render any management consultancy services cannot be faulted - Management consultancy and such management services which are executor in nature would merit classification under Business Auxiliary Services - Following decision of BASTI SUGAR MILLS CO. LTD. Versus COMMISSIONER OF C. EX., ALLAHABAD 2007 (4) TMI 25 - CESTAT,NEW DELHI - Decided against Revenue.
Issues:
Classification of services under "Management Consultancy Service" or "Business Auxiliary Services" for the purpose of service tax liability. Analysis: The appeal before the Appellate Tribunal CESTAT Mumbai involved a dispute regarding the classification of services provided by M/s. Sahney Kirkwood Pvt. Ltd. The lower appellate authority had concluded that the services rendered by the recipient did not fall under "Management Consultancy Service" but rather under "Business Auxiliary Services." The Revenue, aggrieved by this decision, appealed against it. The Revenue contended that the definition of "Management Consultant" is broad and includes services rendered directly or indirectly in connection with the management of any organization. Therefore, they argued that the services provided by the assessee should be classified as "management consultant" services, attracting service tax liability. Upon considering the submissions from both sides, the Tribunal examined the agreements between the parties involved. It was revealed that M/s. Sahney Kirkwood Pvt. Ltd. was providing space and support for manufacturing operations to another company, M/s. Sahney Commutators Pvt. Ltd. The Tribunal noted that SKL was actually managing the operations of SCPL by employing their own staff, indicating a role more akin to a manager rather than a managing consultant. Drawing a distinction between a manager and a consultant, the Tribunal found that the lower appellate authority's reasoning was sound in concluding that the services provided did not qualify as management consultancy services. The Tribunal referenced previous judgments, including the case of Glaxo Smithkline Pharmaceuticals Ltd. and Basti Sugar Mills Co. Ltd., to support their decision. These judgments established that management services of an executor nature would be classified under "Business Auxiliary Services." Therefore, the Tribunal dismissed the Revenue's appeal, upholding the lower appellate authority's decision as valid and in accordance with the law. In conclusion, the Appellate Tribunal CESTAT Mumbai ruled in favor of the respondent, determining that the services provided by M/s. Sahney Kirkwood Pvt. Ltd. were appropriately classified under "Business Auxiliary Services" rather than "Management Consultancy Services," thereby dismissing the Revenue's appeal.
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