2013 (12) TMI 374 - AT - Service Tax

Demand of service tax - Management Consultancy Services - Amount paid to foreign service provider - Held that - the amount paid by the appellant to foreign based service provider under the category of SAP and IT Support Services is sought to be treated as payment towards Management Consultancy Services which is prima facie incorrect. Therefore we hold that the applicant had made out a case for full waiver of the dues as per the impugned order - Stay granted.

Summary

Issues:
Demand of Service Tax under 'Management Consultancy Services' for the period 2008-09. Correct categorization of expenses related to SAP and IT Support Services. Applicability of Service Tax on expenses paid to foreign service provider. Interpretation of Tribunal's decision in the case of IBM India Pvt. Ltd. regarding ERP implementation services.

Analysis:
The judgment pertains to a demand of Service Tax amounting to Rs. 62,54,560 for the period 2008-09 under the category of 'Management Consultancy Services', along with interest and penalties. The appellant, an applicant-company, incurred expenses in foreign currency for travel management fee, consultancy, and other purposes related to IS and SAP. The expenses under SAP were classified into SAP Licence Fee and SAP and IT Support services. The Department treated the amount paid to a foreign service provider under 'SAP and IT Support Services' as payment for 'Management Consultancy Services', which the appellant contested. The appellant argued that the expenses were wrongly categorized and relied on a Tribunal decision in the case of IBM India Pvt. Ltd., which held that services related to ERP implementation are not liable to Service Tax under 'Management Consultancy Services'.

The learned JCDR reiterated the Commissioner's findings and reasoning. Upon considering the submissions and records, the Tribunal found that the categorization of the amount paid to the foreign service provider as 'Management Consultancy Services' was incorrect. Consequently, the Tribunal held that the appellant had established a case for a full waiver of the dues as per the impugned order. Therefore, the Tribunal decided to waive the pre-deposit of dues and stayed the recovery thereof until the appeal's disposal.

In conclusion, the Tribunal's judgment revolved around the correct classification of expenses related to SAP and IT Support Services, disputing the categorization under 'Management Consultancy Services' for Service Tax purposes. The Tribunal's decision was based on the appellant's arguments and the interpretation of relevant legal precedents, leading to the waiver of dues and stay on recovery pending appeal disposal.