2017 (6) TMI 818 - AT - Service Tax

Management Consultancy Service - Manpower Recruitment Service - demand of tax for professional capacity for the period 1998-2002 - Held that - There is no dispute that Management Consultancy Service is not mentioned in clause (i) to (xi) of the said notification. So, the appellant are eligible to the benefit of the said notification prior to 01.08.2002 - The appellant is eligible for exemption under notification as per Board s Circular No.55/98-ST - demand not sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellants, as practicing Chartered Accountants, are liable to pay service tax on Management Consultancy Services and Manpower Recruitment Service for the period 1998-2002.
2. Whether the amendment brought forth by Notification No. 15/2002-ST has retrospective effect.

Analysis:

1. The demand was raised for the period 1998-2002, alleging that the appellants, as practicing Chartered Accountants, were liable to pay service tax on Management Consultancy Services and Manpower Recruitment Service. Initially, Notification 59/98 exempted taxable services provided by practicing Chartered Accountants, excluding services like Management Consultancy Service and Manpower Recruitment Service. However, Notification No. 15/2002-ST introduced an Explanation stating that services provided by practicing Chartered Accountants falling under other taxable services are not exempt. The department argued that this amendment had retrospective effect.

2. The appellant's counsel referred to previous decisions where it was held that services provided by practicing Chartered Accountants, including Management Consultancy Service, were exempt until 01.08.2002 as per Notification 59/98. The Tribunal noted that the disputed notification did not indicate retrospective application and that benefits under the notification could not be denied retrospectively. Therefore, services provided by the appellants before 01.08.2002, other than those specified in Notification No. 55/98-ST, were not taxable.

3. Relying on the above precedents, the Tribunal found the demand unsustainable. The impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal emphasized that services provided by the appellants, which were not mentioned in Notification No. 55/98-ST, were not liable to be taxed until 01.08.2002.

In conclusion, the Tribunal ruled in favor of the appellants, holding that they were not liable to pay service tax on Management Consultancy Services and Manpower Recruitment Service for the period 1998-2002, based on the notifications and precedents cited. The demand was deemed unsustainable, and the appeal was allowed, providing relief to the appellants.