2005 (9) TMI 687 - AT - Service Tax

Summary

Issues:
1. Classification of the appellant as a Management Consultant for tax purposes based on the sale of software.
2. Interpretation of essential ingredients for inclusion as a Management Consultant.
3. Exemption under Notification No. 15/2004-Service Tax for Enterprise Resource Planning software system.
4. Validity of the Order-in-Original versus the Review Order.

Analysis:
1. The appeal addressed the classification of the appellant as a Management Consultant under Section 65(13) of the Finance Act, 1994, based on the sale of software. The Assistant Commissioner accepted the appellant's plea that they were not a Consulting Engineer but a Management Consultant. The appellant argued that the mere sale of software does not constitute Management Consultancy services. The Commissioner's order lacked reasoning and findings, leading the Tribunal to remand the matter for reconsideration, emphasizing the need for detailed examination of the appellant's contentions.

2. The Tribunal analyzed the essential ingredients for inclusion as a Management Consultant, highlighting that the person must be engaged in providing services related to the management of an organization. The appellant contended that their activities did not meet these criteria as they were solely selling software, not providing consultancy services. The Tribunal found merit in the appellant's argument, emphasizing the importance of a detailed assessment in determining the appellant's classification.

3. The appellant cited Notification No. 15/2004-Service Tax, which granted exemption for Enterprise Resource Planning software systems supplied by Management Consultants. However, the period in question predated the notification, leading to a debate on the applicability of service tax. The Tribunal acknowledged the notification but directed the Commissioner to thoroughly examine all aspects, including the exemption claim, during the reconsideration process.

4. The Tribunal compared the Order-in-Original, which provided detailed reasoning for dropping the proceedings, with the Review Order, which lacked findings and was deemed a non-speaking order. The appellant argued that the Assistant Commissioner's order was comprehensive and justified, contrasting it with the Commissioner's order, which lacked detailed analysis. The Tribunal instructed the Commissioner to address all points raised by the appellant and provide a thorough decision within four months, allowing the appellant to contest the appeal effectively.