2009 (1) TMI 159 - AT - Service Tax

Services of Chartered Accountant Appellant dismissed for non-compliance with stay order Not. No. 15/02 amended Exemption Not. No. 59/98 on 1.8.2002 - Effect of this amending Notification is that Management consultancy Service provided by C.A taxable from 1.8.02 - prima facie the appellants have strong case on merits as the amendment to Notification is not retrospective - appellants would be ready to pre-deposit an amount of Rs. 15,000/- which is the liability after 1-8-2002, within a period of one month stay application and the appeal are disposed of by way of remand to the Commissioner (Appeals).

Summary

Issues:
1. Liability to pay service tax on services provided by Chartered Accountants under the category of 'Management Consultant Services'.
2. Interpretation of Notification No. 15/2002-S.T. regarding the applicability of service tax on services provided by Chartered Accountants.
3. Retrospective application of the Notification leading to a demand for service tax for an earlier period.
4. Dismissal of appeal for failure to pre-deposit the entire amount demanded by the Revenue.

Analysis:
1. The judgment dealt with the liability of Chartered Accountants to pay service tax on services provided under the category of 'Management Consultant Services'. The Revenue contended that services rendered by the appellants fell under this category and were thus taxable. The period in question was from 1-4-1999 to 31-3-2003.

2. The appellants argued that they were exempt from service tax under Notification No. 59/98-ST dated 16-10-1998, which exempted certain services provided by Chartered Accountants. However, an amending Notification No. 15/2002-S.T. added an explanation stating that services related to management of organizations or recruitment of manpower by Chartered Accountants would be taxable under 'Management Consultant Services'. The appellants contended that this amendment was prospective and should not apply retrospectively.

3. The Tribunal acknowledged the appellants' argument that the amendment to the Notification was not retrospective. Citing a previous decision in a similar case, the Tribunal found that the explanation inserted by Notification No. 15/2002 could not be applied retrospectively. The appellants were aggrieved by the demand for service tax for the earlier period based on this retrospective application.

4. The Commissioner (Appeals) had ordered the appellants to pre-deposit the entire service tax demanded along with interest. The appellants sought more time and believed they were entitled to a waiver of the pre-deposit amount on merits. However, their request was ignored, leading to the dismissal of the appeal for failure to comply with the pre-deposit order. The appellants requested a remand to the Commissioner (Appeals) for a decision on merits.

In conclusion, the Tribunal found merit in the appellants' case regarding the non-retrospective application of the Notification and decided to remand the matter to the Commissioner (Appeals) for a fresh hearing on merits. The appellants were not required to make any further pre-deposit, and the matter was disposed of with a direction for the Commissioner (Appeals) to decide within a specified timeframe upon a partial pre-deposit made by the appellants.