2008 (8) TMI 26 - AT - Service Tax

Appellant are an Institution recognized by the Department of Scientific and Industrial Research, Ministry of Science and Technology - thrust of the Appellant s activity is conducting scientific research related to productivity and undertaking technical study in this regard for their clients and tendering advice to them for optimizing their productivity hence appellant is more appropriately covered under Scientific or Technical Consultancy Service than Management Consultancy

Summary

Issues:
Classification of services as Management Consultancy or Scientific & Technical Consultancy for the purpose of service tax liability.

Analysis:
The case involved a dispute regarding the classification of services provided by the Appellant as either Management Consultancy or Scientific & Technical Consultancy for the purpose of service tax liability. The Appellant, recognized by the Department of Scientific and Industrial Research, Ministry of Science and Technology, claimed to be engaged solely in Scientific and Technical consultancy. The Revenue alleged that the services provided by the Appellant during a specific period were Management Consultancy services and demanded service tax accordingly.

The Appellant argued that their activities, as outlined in their Memorandum of Association, fell within the ambit of Scientific & Technical Consultancy. They highlighted that all regional offices were registered under Scientific & Technical Consultancy and were paying service tax on that basis. The services provided by the Appellant focused on process technology improvement, energy conservation, and quality management, which they contended were technical in nature.

On the other hand, the Revenue argued that the services provided by the Appellant, such as system improvement and work study, constituted Management Consultancy services. They cited a Tribunal judgment to support their position that academic or professional qualifications were not prerequisites for being classified as a Management Consultant.

The Tribunal analyzed the definitions of Scientific & Technical Consultancy and Management Consultancy under the Finance Act, 1994. After reviewing the projects conducted by the Appellant, the Tribunal found that the majority of the projects involved scientific or technical advice in various disciplines. They determined that the activities of the Appellant aligned more closely with Scientific & Technical Consultancy based on the nature of the projects and the objectives of increasing productivity through scientific research.

Consequently, the Tribunal held that the impugned order confirming the service tax liability as Management Consultancy was not sustainable. The appeal was allowed in favor of the Appellant, emphasizing that their services were appropriately categorized as Scientific & Technical Consultancy.