2005 (8) TMI 10 - AT - Service Tax

Service Tax (1) classification of - assistance in appointing/training marketing/service staff covered (2) Classification of - conducting survey for products covered by market (3) Quantification -so

Summary

Issues:
1. Whether the services assigned under the Memorandum of Understanding (MOU) between two parties constitute taxable services for the purpose of service tax.
2. Whether the demand of service tax on the assigned services is within the normal period of limitation or falls under the longer period of limitation.

Analysis:

Issue 1: Taxability of Assigned Services
The MOU between the appellants and another party assigned various responsibilities to the appellants, including coordinating with agents, conducting surveys, training staff, and more. The Department demanded service tax on the assigned services, alleging they constituted Management Consultancy, Manpower Recruitment Agency service, and Market Research Agency service. The original authority confirmed the demand, imposing penalties. The first appellate authority upheld the decision on two services but found no evidence of Management Consultancy. The appellants argued that all services were "business auxiliary services" under the Finance Act, 1994. The Tribunal analyzed the services listed in the MOU and determined that services like assisting in appointing/training staff could be considered as Manpower Recruitment Agency service. The Tribunal also found that conducting surveys for products fell under Market Research Agency service, rejecting the argument that it was evaluation of prospective customers. The Tribunal upheld the taxability of the services listed in the MOU.

Issue 2: Limitation Period for Demand of Service Tax
The appellants raised a plea regarding the limitation period for the demand of service tax, arguing that necessary grounds for invoking the longer period of limitation were not alleged in the show cause notice. The Tribunal noted that none of the authorities addressed the limitation issue. It directed the original authority to examine the limitation issue and pass a speaking order on it, widening the scope of the remand ordered by the lower appellate authority. The Tribunal emphasized providing a reasonable opportunity for the party to be heard on the limitation issue. The appeal was disposed of with a modification to address the limitation issue.

In conclusion, the Tribunal upheld the taxability of the services listed in the MOU and directed the original authority to address the limitation issue raised by the appellants regarding the demand of service tax.