2017 (1) TMI 802 - AT - Service Tax

Maintainability of appeal - rejection on the ground that the amount involved is less than ₹ 10,00,000/- - Held that - the matter involved in this appeal is concerning classification of the activities of the respondent and which are of recurring nature - This exception viz., classification issues of legal and/or recurring nature is under sub-clause c of Para 3 of the instructions F. No. 390/Misc./163/2010-JC, dated 17-8-2011 issued by C.B.E. & C., Department of Revenue, Ministry of Finance, Government of India says that adverse judgment relating to issue of classification having legal and/or recurring nature has to be contested and decided on merits irrespective of the monetary amount involved - appeal restored.

Summary

Issues involved:
Classification of service under taxable service of 'Management Consultant'; Restoration of appeal dismissed based on monetary grounds; Interpretation of National Litigation Policy regarding exceptions for classification issues.

Analysis:
1. Classification of service under 'Management Consultant':
The case involved a dispute over the classification of services provided by the appellant under the taxable service of 'Management Consultant'. The department contended that the services were liable to service tax, while the appellant argued that the services were integral to management education and hence not taxable. The original adjudication order confirmed the services as taxable, but the Order-in-Appeal dropped the demand, stating that the activities were not classified as 'management consultant services'. The issue of classification was recurring in nature, as evidenced by three show cause notices for subsequent periods. The Tribunal found that the issue of classification was covered by the exceptions mentioned in the National Litigation Policy, requiring a decision on merit.

2. Restoration of appeal based on monetary grounds:
The appeal was dismissed summarily by the Tribunal due to the amount involved being less than ?10,00,000, as per the new Litigation Policy. However, the Revenue filed an application stating that the issue of classification was recurring in nature and therefore not subject to the monetary limit. The Tribunal acknowledged that the dismissal based on monetary grounds was a mistake, as the issue of classification fell under the exceptions of the Policy. The Tribunal referred to relevant case laws and held that restoration of the appeal was necessary to decide the matter on its merits.

3. Interpretation of National Litigation Policy regarding exceptions:
The Tribunal examined the exceptions in the National Litigation Policy concerning issues of classification with legal and recurring nature. It was noted that in such cases, the instructions of non-filing or withdrawal of appeal below the monetary limit of ?10 lakhs would not be applicable. The Tribunal emphasized that adverse judgments related to classification issues must be contested and decided on merits irrespective of the monetary amount involved. The respondent's argument that the issue did not involve classification was dismissed, and the Tribunal ordered the restoration of the appeal for a decision on merits.

In conclusion, the Tribunal found that the issue of classification of services as 'Management Consultant' was recurring and covered by exceptions in the National Litigation Policy. The appeal was restored for a detailed examination and decision on merits, emphasizing the importance of addressing legal and recurring classification issues regardless of the monetary limit.