2018 (2) TMI 1567 - AT - Service Tax

Chartered accountant - liability of service tax - certain considerations received by the appellant for other services (service activities are advice on finance management social / political issues legal matters negotiations retainer service etc. to various corporate entities.) rendered by him in his professional capacity as a Chartered Accountant - Revenue entertained a view that such of the above activities like legal assistance advisory work etc. were taxable under Management Consultant service in terms of Section 65 (65) read with Section 65 (105) (r) of Finance Act 1994. Held that - The guidelines in Code of Ethics framed under the Chartered Accountant Act 1949 categorically state that Chartered Accountant can practice to render entire range of Management Consultancy and other Services . The appellant contested the tax liability for services rendered to Dishnet DSL Ltd. and Essel Mining Industries on the ground that these are more in the nature of legal services - the scope of tax entry for Management Consultant Service covers any service either directly or indirectly in connection with management of any organization in any manner and includes any person who renders any advice consultancy or technical assistance relating to conceptualising designing development modification rectification or upgradation of any working system of any organization. We note the ambit of service activity is very wide and not exhaustively listed - all the services rendered by Appellant now under dispute are covered in such scope of tax entry as above. Revenue neutrality - extended period of limitation - Held that - The statutory provisions which are directly relevant to the practicing Chartered Accountant were amended and the very nature of profession of the Appellant will make it clear that there could have been no bonafide belief about non-liability to tax in the present circumstances - extended period rightly invoked. Appeal dismissed - decided against appellant.

Summary

Issues:
Tax liability on services rendered by a practicing Chartered Accountant under "Management Consultant Service" from 1.10.2003 to 31.3.2006.

Analysis:
1. The appellant, a practicing Chartered Accountant, was under dispute regarding tax liability on services provided in his professional capacity, including advice on finance, management, legal matters, etc., to corporate entities.

2. The Revenue claimed the services fell under "Management, Consultant" service, leading to a tax demand of ?90,83,091/- with penalties under Section 77 and 78 of the Act.

3. The appellant argued against the tax demand citing Notification No.59/98-ST and Notification No.15/2002-ST, claiming exemption for services provided in his professional capacity unless falling under any other taxable services as defined under Section 65 (90) of the Act.

4. The appellant contested that the services provided did not fall under "Management Consultancy Service" and that no specific material analysis was conducted to support the tax liability.

5. The appellant also argued for revenue-neutrality, stating that if liable, the corporate clients could claim credit, and extended period demand was not sustainable without wilful misstatement or suppression of facts.

6. The Tribunal analyzed the Notifications and the Explanation inserted in 2002, concluding that the services provided by the appellant indeed fell under "Management Consultant Service" based on interpretative principles and the Code of Ethics for Chartered Accountants.

7. The Tribunal found that the services rendered by the appellant to corporate entities were within the scope of "Management Consultant Service" as per the broad definition provided in the tax entry.

8. Specific agreements with Dishnet DSL Ltd. and Essel Mining Industries for legal and strategic advisory services were examined, and it was determined that these services also fell under the ambit of "Management Consultant Service."

9. The Tribunal upheld the impugned order, dismissing the appeal, as there was no justifiable reason to vary the decision, given the amendments in relevant statutory provisions and the nature of the appellant's profession.

This detailed analysis covers the issues involved in the judgment, providing a comprehensive overview of the arguments presented by both parties and the Tribunal's reasoning leading to the final decision.